New threat from Trump to currency manipulatorsWorries are rising in Korea that the Donald Trump administration may broaden its war on currency manipulators as part of its ongoing trade feud with China.
The U.S. Commerce Department released a draft regulation Thursday allowing Washington to penalize countries that undervalue their currencies against the U.S. dollar, which it sees as a subsidy for the country’s exports.
“This change puts foreign exporters on notice that the Department of Commerce can countervail currency subsidies that harm U.S. industries,” said Wilbur Ross, U.S. commerce secretary, in a statement. “Foreign nations would no longer be able to use currency policies to the disadvantage of American workers and businesses.”
The Korean stock market, which started off weak on Friday on general concerns over the trade dispute between United States and China, got weaker.
By noon, the benchmark Kospi dropped 23.18 points, or 1.1 percent compared to the previous closing, to edge closer to the 2,000 mark.
By the end of the day, the Kospi closed 2,045.31, 14.28 points or 0.69 percent less than Thursday’s.
Korea has been on a U.S. currency manipulation monitoring lists since 2016. The U.S. government releases a report on currency manipulation every April and October. However, this April the U.S. Treasury Department did not release a report.
Washington seemed to be targeting China, whose currency has devalued 3 percent in just a month to 6.9 yuan against the U.S. greenback. But Korea could be affected.
In just a month, the Korean won has depreciated more than 4 percent, and is currently trading around 1,190 won against the dollar. The won on Friday slightly appreciated, closing at 1,188.4 won, down from 1,189.2 on Thursday.
However, there’s a possibility that Korea could be crossed off the monitoring list.
According to the U.S. Commerce, Korea’s trade surplus with the United States last year was $17.9 billion, which falls below $20 billion, one of three criteria that put a nation on the monitoring list.
In March, the Bank of Korea disclosed that in the second half of last year, the Korean government net sold $187 million on the forex market. That’s less than 0.0001 percent of Korea’s GDP, less than 2 percent of GDP, another of the three criteria.
BY LEE HO-JEONG [firstname.lastname@example.org]
with the Korea JoongAng Daily
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