Seoul avoided the label of a currency manipulator, but stayed on Washington’s monitoring list for close watch on foreign exchange interventions.

“Treasury finds that five major trading partners warrant being placed on the Monitoring List for special attention: China, Germany, Japan, Korea and Switzerland,” said the U.S. Department of Treasury that released its second semi-annual foreign exchange report on Tuesday (local time).

Taiwan which had been on the same list in April was dropped as it was cited for reduced scale of foreign exchange intervention. China avoided the manipulator label despite President Donald Trump’s harsh criticism on Beijing’s interventionist policy as largely expected as Washington needs more support from Beijing to wield influence to contain Pyongyang’s nuclear and missile program.

“Korea has significant bilateral trade surplus with the United States,” said the report adding that the U.S. will “continue to closely monitor Korea’s currency practices and urges the authorities to enhance the transparency of its exchange rate intervention.”

On Wednesday, the dollar closed at 1129.9 won, down 0.23 percent or 2.6 won from the previous session.

The U.S. Treasury Department releases a semi-annual report on foreign exchange policies of major U.S. trading partners in April and October under the Trade Facilitation and Trade Enforcement Act in 2015.

Under the law, it has established thresholds for the three criteria to judge whether a certain U.S. trading partner’s foreign exchange policy goes against U.S. trade interests: a significant bilateral trade surplus with the U.S. of at least $20 billion, current account surplus of at least 3 percent of gross domestic product (GDP), and net purchase of foreign currency totaling at least 2 percent of GDP.

In its April report, Korea met two of the three criteria with $27.7 billion trade surplus with the U.S. and current account surplus standing at 7 percent of GDP. The country also met two criteria in the October report, with $22 billion trade surplus with the U.S. and current account surplus of 5.3 percent of GDP.

“Korean authorities have reduced net foreign exchange intervention even as the exchange rate has appreciated moderately against the dollar,” according to the report that estimated the nation net purchased about $5 billion of foreign exchange - 0.3 percent of GDP - to limit won appreciation.

The report also urged Korea to strengthen domestic demand and reduce reliance on external demand for growth.

By Cho Si-young and Choi Mira

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]