U.S. signals tougher stance on Korea’s currency after FX monitoring listing

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U.S. signals tougher stance on Korea’s currency after FX monitoring listing

Published: 06 Jun. 2025, 17:03 Updated: 06 Jun. 2025, 18:24

Audio report: written by reporters, read by AI

U.S. Treasury Secretary Scott Bessent looks on during a press conference in the Oval Office at the White House in Washington, on May 30. [EPA/YONHAP]

The U.S. Treasury Department has once again placed Korea back on its currency watch list, citing persistent trade and current account surpluses. While the move does not bring direct penalties, analysts expect Washington to ramp up pressure on Seoul's foreign exchange policies ahead of sensitive trade negotiations.

In a report submitted to Congress on Thursday, the Treasury listed nine economies — Korea, China, Japan, Singapore, Taiwan, Vietnam, Germany, Ireland and Switzerland — for close monitoring of their foreign exchange practices and macroeconomic policies. The list is part of the “Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States” report.

Ireland and Switzerland were newly added to the list, while Korea remained on it after being reinstated last November. Korea was first designated in April 2016 but had been removed in November 2023, only to reappear a year later under the Biden administration, just before U.S. President Donald Trump took office.

The Treasury cited Korea’s significant bilateral trade surplus and large current account surplus as key concerns. It noted Korea recorded a $55 billion trade surplus with the United States in 2024 and a current account surplus equal to 5.3 percent of that year's GDP — up sharply from 1.8 percent in 2023.

A dealer walks past near the screens showing foreign exchange rates at Hana Bank's dealing room in in central Seoul on June 5. [AP/YONHAP]

Being named on the monitoring list carries no immediate consequences. The list is intended to flag countries suspected of artificially intervening in foreign exchange markets to gain a trade advantage. It does not prohibit all forms of market stabilization efforts.

“Given the dollar’s current weakening trend and easing tensions between the United States and China, the significance of the report itself may be limited,” said Baek Seok-hyun, an economist at Shinhan Bank. “What matters more now is the ongoing exchange rate consultation with the United States.”

Korea is in the midst of negotiations with U.S. Treasury officials on currency issues as part of a broader economic consultation package, with a deadline set for July 8.

The report also signaled tougher scrutiny in upcoming editions. The Treasury said future assessments will focus more deeply on the use of sovereign wealth funds and other state-controlled investors; macroprudential measures; capital flow management and competitive devaluations beyond direct market intervention.

Washington’s scrutiny of currency practices has intensified under the Trump administration, which views persistent trade deficits as structural imbalances partially caused by foreign exchange intervention. The next Treasury report, expected around October or November, is likely to reflect these heightened standards.

Containers are stacked at Pyeongtaek Port in Gyeonggi on June 1. [YONHAP]

Under the 2015 Trade Facilitation and Trade Enforcement Act, the Treasury must review the economic and currency practices of the United States' top 20 trading partners and apply three criteria to flag manipulation.

These criteria are: a bilateral trade surplus with the United States of at least $15 billion; a current account surplus exceeding 3 percent of GDP; and persistent net purchases of foreign currency over at least 8 of the past 12 months, totaling more than 2 percent of GDP.

Countries meeting all three criteria undergo enhanced analysis and risk being labeled currency manipulators. Those meeting two criteria are placed on the watch list.

A spokesperson from Korea’s Ministry of Economy and Finance said the government would continue maintaining regular dialogue with the U.S. Treasury to “deepen mutual understanding and trust” on foreign exchange matters.

“We plan to proceed carefully with the ongoing bilateral consultations on currency policy,” the official added.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY JANG WON-SEOK [[email protected]]