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(2nd LD) U.S. keeps S. Korea on list of countries to monitor for currency practices

All News 10:24 January 14, 2020

(ATTN: ADDS remarks from official at South Korea's finance ministry, details in last 6 paras; AMENDS dateline)
By Lee Haye-ah

WASHINGTON/SEJONG, Jan. 13 (Yonhap) -- The United States said Monday it is keeping South Korea on a list of countries to monitor for currency practices.

The U.S. Treasury Department published the decision in a semiannual report to Congress, which also included nine other countries, including China, Japan and Germany, in the monitoring list. China had previously been listed as a currency manipulator.

South Korea had hoped to be exempted after the Treasury indicated in its previous report in May that the fourth-largest Asian economy could be removed from the list if it continued to meet only one of the three criteria for a currency manipulator in the ensuing six-month period.

The U.S. Department of the Treasury in Washington (Yonhap)

The U.S. Department of the Treasury in Washington (Yonhap)

However, the new report said South Korea's bilateral trade surplus with the U.S. rose back above the threshold, qualifying for two of the three criteria.

The U.S. determines a trading partner to be a currency manipulator if it has a bilateral trade surplus with the U.S. of at least US$20 billion, a current account surplus of at least 2 percent of gross domestic product and "persistent, one-sided intervention" in foreign exchange markets.

The Treasury said South Korea's trade surplus "has edged slightly up since 2018 to just above $20 billion over four quarters through June 2019, driven by increased Korean exports to the United States."

It also said the Asian economy's current account surpluses continued to moderate but still remained at 4 percent of the GDP over the four quarters ending in June 2019.

"Korea has met two of the three criteria in every Report since April 2016 with the exception of the May 2019 Report, having a material current account surplus and a significant bilateral trade surplus with the United States," the report said.

Meanwhile, China's listing made headlines because it signified that the U.S. is dropping its designation of the country as a currency manipulator ahead of the signing of a preliminary bilateral trade deal Wednesday.

An official at South Korea's finance ministry said the ministry had expected the Treasury Department to keep Seoul on the watchlist, citing the nation's goods trade surplus with the U.S. as well as large external surpluses.

The official, who spoke on the condition of anonymity, said South Korea had been in full consultations with the U.S. before the report was released.

"The Treasury welcomes Korea's commitment to increasing the transparency of its foreign exchange intervention and its disclosure in September of Korea's intervention activity in the first half of 2019," the report said.

"The authorities should limit currency intervention to only exceptional circumstances of disorderly market conditions," it said.

With the U.S. dropping its designation of China as a currency manipulator, the finance ministry official said it would help stabilize local financial markets.

South Korean stocks opened higher on Tuesday morning, as investors remain hopeful over the signing of a U.S.-China trade deal later this week and cheered the U.S. removing China from its list of currency manipulators.


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