US Maintains South Korea and China as Currency Watchlist Countries; Vietnam and Switzerland Designated as Manipulators (Comprehensive)

Designation as a Monitoring Country Due to U.S. Trade Surplus and Current Account Surplus

Steven Mnuchin, U.S. Secretary of the Treasury
[Photo by Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The U.S. Department of the Treasury has maintained South Korea on its currency watchlist. China was also kept on the watchlist, but Switzerland and Vietnam were newly added to the currency manipulator list.

On the 16th (local time), the U.S. Treasury submitted the "Macroeconomic and Foreign Exchange Policies of Major Trading Partners Report" (Currency Report) to Congress, announcing that 10 countries including China, Japan, South Korea, Germany, Italy, Singapore, Malaysia, Taiwan, Thailand, and India were designated as currency watchlist countries.

The watchlist designation is based on three criteria: ▲a trade surplus with the U.S. exceeding $20 billion over the past year ▲a current account surplus exceeding 2% of Gross Domestic Product (GDP) ▲persistent and one-sided foreign exchange market intervention involving net purchases of foreign currency exceeding 2% of GDP over 12 months. Countries meeting two of these criteria or having an excessive trade surplus with the U.S. are classified as watchlist countries.

South Korea met the watchlist criteria due to its trade surplus with the U.S. and current account surplus, as before.

China was designated as a watchlist country. China had been labeled a currency manipulator in August 2019 but was removed from the manipulator list two days before signing the Phase One trade agreement earlier this year.

The Treasury also mentioned in its press release that "the U.S. urged China to increase transparency in currency management."

Taiwan, Thailand, and India were newly added to the watchlist, while Switzerland and Vietnam were newly added as currency manipulators.

When designated as a currency manipulator, the U.S. can demand corrective actions from the country and, if no improvement occurs after one year, impose sanctions such as restrictions on U.S. corporate investments.

The Treasury explained that this report is based on evaluations covering four quarters through June of this year. The U.S. currency report is usually released around April and October but has been delayed recently. The report for the second half of last year was released in January this year, and the report for the first half of this year has not yet been published.

This content was produced with the assistance of AI translation services.