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U.S. keeps S. Korea on 'Monitoring List' for FX practices

All News 23:33 June 10, 2022

By Byun Duk-kun

WASHINGTON, June 10 (Yonhap) -- South Korea has again been placed on a list of countries to be closely monitored by the U.S. for currency practices, the U.S. Department of Treasury said Friday.

South Korea is one of 12 countries to be placed on the Monitoring List, which merits "close attention to their currency practices and macroeconomic policies," according to the treasury department.

"The administration continues to strongly advocate for our major trading partners to carefully calibrate policy tools to support a strong and sustainable global recovery," Treasury Secretary Janet Yellen was quoted as saying.

"An uneven global recovery is not a resilient recovery. It intensifies inequality, exacerbates global imbalances and heightens risks to the global economy," she added.

The 12 countries placed on the monitoring list include China, Japan, Germany, Italy, India, Malaysia, Singapore, Thailand, Taiwan, Vietnam and Mexico.

South Korea has now been placed on the U.S. list for at least three consecutive quarters.

Countries are placed on the monitoring list when they meet two of the three criteria set by the U.S. Trade Facilitation and Trade Enforcement Act of 2015, also known as the 2015 Act.

The three criteria are: a bilateral trade surplus of over US$15 billion with the U.S., a material current account surplus of more than 3 percent of gross domestic product (GDP) and persistent, one-sided intervention in the foreign currency market in at least eight out of 12 months with net purchases of over 2 percent of the economies' GDP over a 12-month period.

The department said South Korea's current account surplus further widened to 4.9 percent of GDP in 2021 from 4.6 percent the previous year.

It is also believed to have excessively intervened in the foreign exchange market.

"Korea reported net foreign exchange sales of (US)$14 billion (0.8% of GDP) in the spot market, which had the effect of stemming won depreciation in 2021. Treasury estimates that the Korean authorities made most of these sales in the second half of 2021, when the won depreciated 5.1% against the dollar," the department said in its report.

"Korea has well-developed institutions and markets and should limit currency intervention to only exceptional circumstances of disorderly market conditions," it added.

bdk@yna.co.kr
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