U.S. Re-designates Korea to Exchange Rate Observation Countries..."A Surge in Current Account Surge"

South Korea, which was excluded from the U.S. exchange rate observation for the second time in a row, has been re-designated this time.

The U.S. Treasury Department added South Korea to its list of observations in its semi-annual report released on the 14th local time.

South Korea has been re-designated as a country subject to exchange rate observation because it has a trade surplus with the U.S. of more than $15 billion and a current account surplus of more than 3% of its gross domestic product.

In addition to Korea, China, Japan, Taiwan, Singapore, Vietnam, and Germany were also on the list of exchange rate observation countries, but these countries were also on the list in June.

South Korea has been on the exchange rate watch list for seven years since 2016, but it was removed from the list for the second consecutive time in November and June last year.

Under the Trade Promotion Act enacted in 2015, the U.S. evaluates exchange rate policies of the top 20 countries with large trade volumes and designates them as in-depth analysis or observation countries according to certain criteria.

The valuation criteria are a trade surplus with the U.S. worth more than $15 billion, a current account surplus equivalent to more than 3% of GDP, and a net purchase of dollars for at least eight of the 12 months and the amount is more than 2% GDP.

If all three of these criteria are met, they are subject to in-depth analysis, and if only two are met, they are subject to observation.

In the last report, South Korea was only on a trade surplus basis, but this time, the current account surplus hit 3.7% GDP, re-designating it as a target country for observation.