Korea avoids currency manipulator designation.
Korea has avoided being designated as a currency manipulator in a United States Treasury Department report released Wednesday (local time).
Still, the half-yearly report kept Korea on its monitoring list for the fourth straight time, dropping hints that the U.S. may use economic pressure on Korea.
According to the report, Foreign Exchange Policies of Major Trading Partners of the United States, five countries - Korea, China, Japan, Germany and Switzerland - are included on the monitoring list. Taiwan was excluded from the latest monitoring list.
In its review of 13 major trading partners of the U.S., the treasury checked whether the economies meet three criteria specified in the Trade Facilitation and Trade Enforcement Act of 2015.
They are a significant bilateral trade surplus with the United States of at least $20 billion; a material current account surplus of at least 3 percent of gross domestic product; and persistent, one-sided intervention in the currency market, including repeated purchases of foreign currency.
A nation meeting all three criteria is labeled a currency manipulator, but the treasury said no nation did this during the four quarters ending June this year.
Four nations were placed on the list as they met two conditions. China only met the first condition but was included on the watch list because it "has an extremely large and persistent bilateral trade surplus with the U.S., by far the largest among any of the U.S.'s major trading partners."
Korea was placed on the list as it met two criteria of trade and current account surpluses with the U.S.
The country posted a $22 billion trade surplus with the U.S. during the cited period, down $8 billion from the previous year. Korea's current account surplus also narrowed to 5.7 percent during the cited period.
The treasury noted, "The Korean authorities have reduced net foreign exchange intervention even as the exchange rate has appreciated moderately against the dollar."
"It is important that the Korean authorities act to strengthen domestic demand and avoid reverting to excessive reliance on external demand for growth," the report said.
Experts say the announcement kept Korea from external risks stemming from the U.S. and China, but it is too early for Seoul to become complacent about these.
China's economic retaliation on Korea's decision to deploy a U.S. anti-missile system on its soil, a renegotiation of the Korea-U.S. free trade agreement and the currency manipulator designation have been lingering risks for Korea.
Korea and China agreed to extend their currency swap deal earlier this month, a symbolic event thawing the two countries' frozen trade relations.
Despite the efforts, the risks coming from North Korea's continued pursuit of its nuclear program still remains and it is premature to believe China's economic retaliation has ended, experts said.
The currency manipulator designation is also an ongoing issue, given Korea is still on the watch list and the U.S. can name Korea a manipulator depending on its trade relations with China.
"Treasury will continue to closely monitor Korea's currency practices and urges the authorities to enhance the transparency of its exchange rate intervention," the report said.
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|Publication:||The Korea Times News (Seoul, Korea)|
|Date:||Oct 18, 2017|
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