U.S. welcomes increased transparency in S. Korea's FX market intervention

By Byun Duk-kun

WASHINGTON, Dec. 16 (Yonhap) -- The United States on Wednesday welcomed steps taken by South Korea to increase the transparency of its foreign exchange intervention.

It also said the country's market intervention, along with other fiscal steps to help stabilize the economy, seems "warranted."

"Korea implemented comprehensive public health measures that limited the spread of COVID-19. Nevertheless, Korea's financial markets experienced volatility, and its growth outlook deteriorated as the pandemic spread worldwide," the U.S. Department of Treasury said in an annual report to Congress that named Vietnam and Switzerland as currency manipulators.

South Korea, along with nine other countries including Japan, Germany and Italy, were put on a monitoring list.

The Treasury Department noted that countries, once put on the monitoring list, will "remain there for at least two consecutive reports to help ensure that any improvement in performance versus the criteria is durable and is not due to temporary factors."

Regarding South Korea, the report said the country intervened in the foreign exchange spot market with net sales of US$9.1 billion over a one-year period ending in June 2020.

While noting the amount represented only 0.6 percent of South Korea's gross domestic product, far lower than the 2 percent threshold that would raise an alarm for the U.S., the Treasury Department said South Korea continued to increase its transparency.

"Treasury welcomes Korea's steps to increase the transparency of its foreign exchange intervention, including by transitioning to quarterly disclosure from semiannual in December 2019," the report said.

"Given the slowdown in growth that was already underway prior to the pandemic, a stronger fiscal response seems warranted, particularly if growth wanes or further risks materialize," it added.

bdk@yna.co.kr
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