By Song Sang-ho
WASHINGTON, Nov. 7 (Yonhap) — The United States has taken South Korea off its list of countries to monitor for their foreign exchange policies, a Treasury Department report revealed Tuesday, signifying the Asian country’s first exclusion in more than seven years.
The semiannual Report to Congress on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States, published following its June report, included China, Germany, Malaysia, Singapore, Taiwan and Vietnam, with South Korea and Switzerland removed.
In accordance with the U.S. Trade Facilitation and Trade Enforcement Act of 2015 (the 2015 Act), countries are put on the list when they meet two of three criteria. These criteria are a bilateral trade surplus of at least US$15 billion with the U.S., a material current account surplus of at least 3 percent of a nation’s GDP, and persistent, one-sided intervention in the foreign currency market in at least eight months of a year with net purchases totaling at least 2 percent of an economy’s GDP over a 12-month period.
“Korea was removed from the Monitoring List in this Report, having met only one out of three criteria in the 2015 Act for two consecutive reports,” the report reads, referring to the criteria on a trade surplus.
It also mentioned that the department found that no major trading partners met all three criteria under the 2015 Act during the four quarters ending in June this year, such that no major trading partners require “enhanced analysis.”
Regarding China, the report indicated that the world’s second-largest economy’s failure to publish foreign exchange interventions and broader lack of transparency around key features of its exchange rate mechanism continue to make it an “outlier” among major economies, warranting the department’s close monitoring.
“It remains on the Monitoring List for this reason as well as due to its outsized trade imbalance with the United States,” it said.
sshluck@yna.co.kr
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