Increased Scrutiny
The U.S. Treasury Department announced on June 16 that it will continue to list South Korea on the currency watchlist on its official website.
Other countries included on the list are China, Switzerland, Germany, Malaysia, Singapore, and Taiwan. Japan, which was on the previous watchlist, is now off.
The currency watchlist has three criteria: bilateral trade surplus with the U.S.; current account surplus as a percentage of Gross Domestic Product (GDP); and persistent, one-sided market intervention.
More specifically, the criteria evaluated includes a bilateral trade surplus with the U.S. of at least US$20 billion; a current account surplus of at least 3% of GDP or a current account surplus gap of at least 1%; and persistent, one-sided market intervention in at least 8 out of 12 months, amounting to at least 2% of GDP.
Although South Korea only met one of the criteria (at least a US$37 billion trade surplus with the U.S.), it was still categorized as a currency watchlist country following the policy of the U.S. Treasury Department.
No countries among major U.S. trading partners were categorized as currency manipulators this time. The Treasury Department stated in its report, “No major trading partner met all three criteria for the 12-month period ending in December last year.”
China was designated as a currency manipulator in August 2019, but this status was lifted in January of the following year, and since then it has maintained its position on the watchlist.