US Monitors Exchange Rate Practices of China and 9 Other Countries

JAKARTA - The United States Department of the Treasury has kept China, Japan, Thailand, and seven other major trading partners on an observation list regarding potentially unfair foreign exchange practices.

In a mid-year report to the US Congress, Thursday (23/7), the department did not designate any trading partner as a currency manipulator that could result in the imposition of US sanctions.

However, the report, which evaluates economic and currency practices by 2025, said China continues to stand out among the US's main trading partners, due to a lack of transparency regarding its exchange rate policies and practices.

The seven other countries on the US "monitoring" list are Germany, Ireland, Singapore, South Korea, Switzerland, Taiwan, and Vietnam.

The US Treasury Department uses three criteria to assess whether a country manipulates its exchange rate to unfairly gain trade advantages.

The three criteria are a trade surplus with the US of at least 15 billion US dollars, a current account surplus of at least 3 percent of gross domestic product (GDP), and continuous and unilateral intervention in the foreign exchange market.

Major U.S. trading partners would be put on the list if they meet two of the three criteria.

Regarding Japan, the report said the country did not intervene in the foreign exchange market during the assessment period.

In addition, Japan is also considered very transparent regarding intervention activities, by publishing monthly data in aggregate as well as daily intervention details once every three months.

The report also noted that the yen continued to weaken even though the interest rate gap between the US and Japan was narrowing.

"Although global factors, such as financial market volatility and oil prices, are likely to have an impact on the exchange rate of the yen, excessive volatility in the yen is undesirable," the statement said.