US keeps S. Korea on ‘monitoring list’ for foreign exchange policy

  • South Korea has again been placed on a list of countries to be closely monitored by the United States in terms of their foreign exchange policies, along with six other nations, the U.S. Department of Treasury has said.
  • Countries are put 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 USD15bn with the United States, a material current account surplus of more than 3% of a country’s gross domestic product (GDP), and persistent, one-sided intervention in the foreign currency market in at least eight months of a year with net purchases of over 2% of an economy’s GDP over a 12-month period.
  • South Korea only met one of the three, having a trade surplus of USD37bn, but stayed on the list as it “triggered at least two criteria in the last report.”
  • In the last report, South Korea also met the criteria of a material current account surplus of more than 3% of the country’s GDP, though it fell to 1.8% in the latest report.
  • South Korea has been on the list since Apr 16, except for 1H19.
  • Observers say South Korea is expected to be excluded from the list in 2H23 if it continues to meet only one criterion.

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