US Re-designates South Korea as 'Currency Watchlist Country'... May Be Removed Next Year

US Trade Surplus of 36 Billion Dollars

The U.S. government has re-designated South Korea as a currency monitoring country.

The Ministry of Economy and Finance announced on the 17th that the U.S. Department of the Treasury released a currency report including South Korea, China, and five other countries as currency monitoring countries.

The U.S. determines whether to designate a currency monitoring country based on three criteria under the Trade Facilitation and Trade Enforcement Act. The three criteria are ▲a trade surplus with the U.S. of $15 billion or more ▲a current account surplus of 3% or more of GDP ▲a net dollar purchase amount of 2% or more of GDP, including intervention for eight or more months out of 12. If two of these criteria are met, the country is designated as a currency monitoring country.

South Korea only meets one criterion, the trade surplus with the U.S. ($36 billion), but the Treasury Department maintained its classification as a monitoring country according to its policy. Under Treasury policy, once designated as a monitoring country, the status is maintained for at least two reports. If only one criterion is met in the second half of this year, South Korea is likely to be excluded in the first half of next year.

In addition to South Korea, the current monitoring countries include China, Germany, Malaysia, Singapore, Switzerland, and Taiwan. Japan, which met only one criterion for two consecutive reports among the previous monitoring countries, was removed from the monitoring list.

If all three criteria are met, a country can be designated as a "comprehensive analysis country," which may lead to being labeled a currency manipulator. There were no countries designated for comprehensive analysis in this evaluation.

[Image source=Yonhap News]

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