FX Rate Manipulation
On April 29, the Department of the Treasury of the United States put South Korea, China, Japan, Germany and Taiwan on its monitoring list with regard to the possibility of foreign exchange rate manipulation.
The Department of the Treasury determines the presence of forex rate manipulation based on three criteria, that is, a large trade surplus being maintained with respect to the United States, a current account surplus equivalent to at least 3% of GDP being maintained, and intervention in the forex market being conducted in a unilateral and repeated manner for a rise in currency value to be blocked.
A country satisfying all of the three at the same time is classified as an exchange rate manipulator and it is subject to strict commerce and investment restrictions. No country was categorized in that group in its latest report released on April 29, in which South Korea was considered not to satisfy the third.
“South Korea has been put on the monitoring list but this is kind of usual,” Deputy Prime Minister Yoo Il-ho said on April 30, adding, “Therefore, there will be no significant change in South Korea’s forex policy for the time being.”