S. Korea avoids being labeled currency manipulator by U.S.

October 17, 2018

WASHINGTON, Oct. 17 (Yonhap) — South Korea on Wednesday avoided being labeled a currency manipulator by the United States but remained on a list of countries to monitor.

The U.S. Department of the Treasury wrote in a semiannual report to Congress that it determined six major trading partners warranted attention to their currency practices. None met the criteria for a currency manipulator.

The six countries are South Korea, China, Germany, India, Japan and Switzerland.

“The Treasury Department is working vigorously to ensure that our trading partners dismantle unfair barriers that stand in the way of free, fair and reciprocal trade,” Treasury Secretary Steven Mnuchin said in a statement. “Of particular concern are China’s lack of currency transparency and the recent weakness in its currency.”

To be labeled a currency manipulator, a trading partner must have a bilateral trade surplus with the U.S. of at least US$20 billion, a current account surplus of at least 3 percent of gross domestic product and “persistent, one-sided intervention” where net purchases of foreign currency are conducted repeatedly and total at least 2 percent of GDP over a year.

South Korea’s goods trade surplus continued to narrow to $21 billion over the four-quarter reporting period ending in June, down more than $7 billion from its peak in 2015, the report said.

The country’s current account surplus also contracted to 4.6 percent of GDP.

“There was a notable and concerning pick-up in foreign exchange intervention in November 2017 and January 2018 that appears to have been for the purpose of slowing won appreciation against the dollar,” the report said. “These purchases were partially reversed through net foreign exchange sales in the first half of 2018 as the won depreciated against the dollar.”

It added, “The Treasury will continue to monitor closely Korea’s currency practices, including the authorities’ recently announced plans to increase the transparency of exchange rate intervention.”