|News1 © News1 Reporter Shin Woongsoo|
Korea was classified as an exchange rate observation target designated by the US Treasury for the fourth consecutive year.
It was analyzed that Korea was classified as an observation target country because the trade surplus with the US and the current account surplus exceeded the standard.
According to the Ministry of Strategy and Finance, on the 16th (local time), the US Treasury Department classified 10 countries, including Korea, China, and Japan, into a monitoring list through the macroeconomic and exchange rate policy reports (exchange rate reports) of major trading partners.
The countries subject to exchange rate observation are designated if they meet two of the following requirements: △Trade surplus with the United States of $20 billion or more △Over 2% of current account surplus compared to Gross Domestic Product (GDP) . If the three requirements are met, it is classified as an exchange rate manipulator.
The US Treasury Department publishes a report that evaluates the macroeconomic and exchange rate policies of 20 countries with trade volume of more than $40 billion each year.
After Korea was first designated as an observation destination in April 2016, Korea maintained the observation destination for four consecutive years.
In this report, Korea recorded a trade surplus of $20 billion with the US and a current account surplus of 3.5% of GDP, showing that two requirements exceeded the standard. Net purchase of dollars was less than the standard by net selling of $9.1 billion (-0.6% of GDP).
The government announced that it has conducted high-level and working-level consultations with the US Treasury Department to utilize the net transaction details of the Korean foreign exchange authorities when determining the foreign exchange market intervention requirements.
In this report, Vietnam and Switzerland were designated as currency manipulators for the first time, exceeding all three requirements. This is the first case of designation since the requirements were strengthened by the enactment of the Trade Promotion Act in 2015.