US Maintains South Korea as 'Currency Watchlist Country'... Government Says "Some Criteria Changed, Favorable in Future"

[Sejong=Asia Economy Reporter Son Seon-hee] The US government has maintained South Korea's designation as a 'currency monitoring country.'

On the 3rd (local time), the US Department of the Treasury released the 'Macroeconomic and Foreign Exchange Policies of Major Trading Partners' report, designating a total of 12 countries, including South Korea, China, and Japan, as currency monitoring countries. Besides Korea, China, and Japan, the list includes Germany, Ireland, Italy, India, Malaysia, Singapore, Thailand, Mexico, and Switzerland.

According to the Ministry of Economy and Finance, this report was prepared based on the macroeconomic and foreign exchange policy evaluations from the second half of last year to the first half of this year for the top 20 countries with the largest trade (goods and services) volume with the US.

Notably, the criteria for in-depth analysis have changed from the previous 'goods trade surplus with the US of over $20 billion' to include an additional requirement of 'services trade surplus of over $15 billion.' Also, the current account surplus threshold was revised to more than 3% of Gross Domestic Product (GDP), and the current account gap to more than 1% of GDP. The scale of net dollar purchases was also changed to more than 2% of GDP with a condition of net purchases sustained for over eight months.

Only two countries, Vietnam and Taiwan, met all three revised in-depth analysis criteria. However, the US did not designate these countries as currency manipulators due to insufficient evidence that they manipulated exchange rates to gain unfair trade advantages.

South Korea, along with China and Japan, was classified as a 'monitoring country' as before. Korea met two out of the three in-depth analysis criteria.

However, when assessing foreign exchange market intervention criteria, the US used South Korea's publicly disclosed net foreign exchange transaction data instead of US estimates. The government explained that this indicates continued US trust in Korea's disclosed data.

Furthermore, the inclusion of the 'services balance' in the in-depth analysis criteria is expected to work favorably for South Korea once global economic activities normalize. This has been a matter consistently raised by the Korean side through Korea-US Treasury Secretary meetings and working-level consultations.

Meanwhile, the Ministry of Economy and Finance reported that the US recommended policy support for economic recovery and medium-term growth, cautious adjustments to monetary policy, and structural reforms such as enhancing potential growth rates, creating youth jobs, reducing elderly poverty through labor market reforms, and strengthening social safety nets.

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