US Maintains South Korea, China, Japan as Currency Watchlist Countries... China Signals Enhanced Monitoring

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The United States has maintained South Korea on its currency watchlist.

On the 3rd (local time), the U.S. Treasury Department included South Korea, China, Japan, and 12 other countries on its currency watchlist in its semi-annual currency report.

The watchlist also includes Ireland, Italy, India, Malaysia, Singapore, Thailand, Mexico, and Switzerland.

The Treasury applied some strengthened criteria for currency policy evaluation starting with this report.

The threshold for a trade surplus with the U.S. exceeding $20 billion over the past year was changed to $15 billion including services, and a current account surplus exceeding 2% of GDP was revised to either 3% of GDP or a current account surplus gap of 1% of GDP. For foreign exchange market intervention involving net purchases of foreign currency exceeding 2% of GDP for 6 out of 12 months, the period was extended to 8 months.

Accordingly, South Korea was listed as a watchlist country due to its trade surplus with the U.S. and current account surplus.

In the first report released in April shortly after the Biden administration took office, Taiwan, Vietnam, and Switzerland were included as enhanced analysis countries, but this time Switzerland was downgraded to a watchlist country. Switzerland had strongly opposed being included as an enhanced analysis country.

Taiwan and Vietnam still meet all three criteria and remain on the enhanced analysis list.

Although no country was classified as a currency manipulator in this report, the Treasury emphasized the lack of transparency in China’s overall exchange rate determination process and stated it will closely monitor the currency-related activities of Chinese state-owned banks without disclosing foreign exchange intervention data.

China was designated as a currency manipulator in August 2019 but was removed from the list in January last year and has since maintained its watchlist status.

Treasury Secretary Janet Yellen said, "We continue relentless efforts, including engagement on currency-related policies of major trading partners, to support the global economic recovery."

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