No U.S. Trading Partners Manipulated Currency in Latest Treasury Report
In the latest semi-annual currency report released by the Treasury Department, it was revealed that no major U.S. trading partners had manipulated their currency in the year leading up to June 30. This announcement marks the end of the Biden administration’s tenure, with President-elect Donald Trump set to take over the oversight of foreign exchange practices.
Trump’s Stance on Currency Manipulation
Former President Trump, known for his concerns about the strong dollar impacting U.S. trade competitiveness, had previously labeled Vietnam and Switzerland as currency manipulators in December 2020 due to their interventions to weaken their currencies. Additionally, China was also designated a currency manipulator in August 2019 during heightened trade tensions, only to have the designation lifted in January 2020 following trade negotiations.
Recent Trend in Foreign Exchange Interventions
Interestingly, over the past four years, U.S. trading partners have been intervening to raise the value of their currencies against the dollar, primarily to combat inflation. This shift in foreign exchange practices has been notable, with President Biden’s term concluding without any manipulation declarations from the Treasury Department.
Monitoring List and Criteria
The Treasury Department’s latest analysis identified China, Japan, South Korea, Taiwan, Singapore, Vietnam, and Germany as countries on the "monitoring list" for increased scrutiny of their foreign exchange activities. Malaysia, previously on the list, was removed, while South Korea was added due to its substantial global current account surplus and trade deficit with the U.S.
Countries meeting two of the following criteria are automatically added to the list:
- Trade surplus with the U.S. exceeding $15 billion
- Global account surplus above 3% of GDP
- Persistent, one-way net foreign exchange purchases
China’s Position
China remains on the monitoring list due to its significant trade surplus with the U.S. and a lack of transparency regarding its foreign exchange policies. The Treasury Department highlighted a rise in China’s export volumes amid falling prices, emphasizing the impact on its trading partners. Calls for increased transparency in China’s foreign exchange practices were reiterated, citing the need for closer monitoring.
Japan’s Inclusion on the Monitoring List
Japan was also included on the monitoring list due to its $65 billion trade surplus with the U.S. and an increase in its global current account surplus. The Treasury Department noted Japan’s interventions to support the yen’s value but stressed that such actions should be reserved for exceptional circumstances and done in consultation.
Implications and Future Actions
The currency report underscores the importance of monitoring foreign exchange practices to ensure fair and transparent trade relations. With ongoing concerns about China’s policies and other trading partners, it is crucial for the U.S. to remain vigilant in addressing currency manipulation.
In conclusion, the Treasury Department’s latest currency report provides valuable insights into global foreign exchange dynamics and highlights the need for continued oversight to promote fair and balanced trade relationships. As individuals, understanding these practices can help us make informed decisions about our investments, savings, and overall financial well-being in an increasingly interconnected global economy.