South Korea on Wednesday avoided being labeled a currency manipulator by the United States but remained on a list of countries to monitor.
The U.S. Department of the Treasury wrote in a semiannual report to Congress that it determined six major trading partners warranted attention to their currency practices. None met the criteria for a currency manipulator.
The six countries are South Korea, China, Germany, India, Japan and Switzerland.
"The Treasury Department is working vigorously to ensure that our trading partners dismantle unfair barriers that stand in the way of free, fair and reciprocal trade," Treasury Secretary Steven Mnuchin said in a statement. "Of particular concern are China's lack of currency transparency and the recent weakness in its currency."
To be labeled a currency manipulator, a trading partner must have a bilateral trade surplus with the U.S. of at least US$20 billion, a current account surplus of at least 3 percent of gross domestic product and "persistent, one-sided intervention" where net purchases of foreign currency are conducted repeatedly and total at least 2 percent of GDP over a year.
South Korea's goods trade surplus continued to narrow to $21 billion over the four-quarter reporting period ending in June, down more than $7 billion from its peak in 2015, the report said.
The country's current account surplus also contracted to 4.6 percent of GDP.
The Treasury estimates that South Korea made net purchases of foreign currency of $4.1 billion (0.3 percent of GDP) in the reporting period, according to the report.
South Korea plans to begin publishing its foreign exchange market intervention data in early 2019.
"The Treasury will continue to monitor closely Korea's currency practices, including the authorities' recently announced plans to increase the transparency of exchange rate intervention," the report said.
In May this year, Seoul said it will reveal its records on currency market intervention biannually for one year and then switch to quarterly disclosures as part of efforts to minimize any negative impact on the market.
The disclosures will be made up to three months after a reporting period, and the net amount of U.S. dollars used for selling and buying by the country's currency authorities will be disclosed. The quarterly releases will begin in the third quarter of 2019.
South Korea's financial authorities have persistently claimed they do not interfere in the foreign exchange market but engage in "smoothing operations" against extreme one-sided movements.
It said authorities will beef up market monitoring and take stern measures against any speculative moves.
Washington has vowed to aggressively keep tabs on and combat unfair currency practices, saying the United States cannot and will not bear the burden of an international trading system that, it claims, unfairly disadvantages American exports and gives an edge to its trading partners.
Source: Yonhap News Agency