US Treasury Keeps South Korea on Currency Watch List… Ministry of Economy and Finance: "Continued Trust from the US"

[Sejong=Asia Economy Reporter Kim Hyunjung] Regarding the U.S. Department of the Treasury's decision to maintain South Korea as a 'currency monitoring country,' the Ministry of Economy and Finance self-assessed that "this indicates the continued trust of the U.S. in the information we disclose."

On the 16th (local time), the U.S. Treasury Department published the 'Macroeconomic and Foreign Exchange Policies of Major Trading Partners' report, maintaining South Korea along with China, Japan, Germany, Italy, India, Malaysia, Singapore, and Thailand as currency monitoring countries.

Mexico and Ireland were newly added to the monitoring list. As a result, the total number of countries on the U.S. Treasury's currency monitoring list reached 11. Monitoring countries are not subject to sanctions but remain under continuous surveillance by the U.S. government. The U.S. Treasury designates a country as a currency monitoring country if it meets two of the following three criteria: ▲a trade surplus with the U.S. exceeding $20 billion over one year, ▲a current account surplus exceeding 2% of GDP, and ▲persistent and unilateral foreign exchange market intervention involving net purchases of foreign currency exceeding 2% of GDP over 12 months.

South Korea met the criteria related to trade surplus ($24.8 billion) and current account surplus (4.6%) among the three conditions above.

The Ministry of Economy and Finance highlighted that, as in the report announced last December, it used the foreign exchange authorities' net transaction data disclosed by South Korea instead of the U.S. Treasury's estimates to assess the foreign exchange market intervention criterion. According to this, South Korea's net dollar purchases amounted to 0.3% of GDP, totaling $5.35 billion. The Ministry reported that "the U.S. recommended continuing expansionary fiscal and monetary policies to normalize economic activities, pursuing structural reforms such as labor market reform to raise potential growth rates and support vulnerable groups, and strengthening social safety nets."

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