Donald Trump likely to strengthen US Treasury’s currency reporting scheme: South Korean foreign exchange official

South Korea was on a foreign exchange "monitoring list" of countries in the October US Treasury report.

By: Reuters | Seoul | Published: November 16, 2016 7:57:02 am
South Korea foreign exchange, South Korean currency, US Treasury, Donald Trump, Trump, business news, world market, latest news, indian express US President-elect Donald Trump. (File Photo)

South Korea is bracing for tougher scrutiny of its foreign exchange management from the U.S. Treasury Department under President-elect Donald Trump, and is working to avoid being labeled a currency manipulator, a South Korean foreign exchange official said. “When Trump takes office, he is likely to greatly strengthen the rules from current levels,” the official with knowledge of fx policy told Reuters late on Monday on the condition of anonymity as he was not authorized to speak publicly about the matter.

Watch What Else Is Making News

“We’re paying close attention to make sure (South Korea) is not added to the list of ‘enhanced analysis’ or ‘currency manipulators’ even if the rules are strengthened.”

South Korea was on a foreign exchange “monitoring list” of countries in the October U.S. Treasury report, along with China, Japan, Germany and Taiwan.

The twice yearly report from the Treasury Department evaluates the currency policies of its major trading partners to assess whether any of the countries are gaining an unfair trade advantage by manipulating their respective currencies.

The South Korean official’s comments underscore the uncertainty that Trump’s Nov. 8 election win has created for policymakers around the world, with financial markets still trying to come to terms with his stance on trade, as well as foreign and domestic policies.

The official added that the Treasury’s next report due in April 2017 is likely to be “a starting point” for the U.S. in pressuring economies that has sizable trade surpluses.

Jeon Seung-ji, a currency analyst at Samsung Futures Inc., said: “If Trump meant what he said (during his campaign), it would be rational to assume that the rules would be strengthened.”

By 0126 GMT, the won was trading near five-month lows of 1,166 on the dollar, having lost about 3 percent since the U.S. election as markets expect a Trump administration to usher in reflationary policies and faster than expected U.S. rate increases.

Credit Suisse said in a report last week that China and Korea could be exposed to hostile trade measures by the U.S. “Both economies are considered major trading partner of the US and run large trade surplus with the US, potentially making them the targets,” it said.

South Korea currently meets two of three criteria in the latest currency report, which puts it on the monitoring list of economies by the U.S.

Asia’s fourth-largest economy had a trade surplus with the U.S. of $25.8 billion in 2015, above the $20 billion specified in the criteria, data from Korea International Trade Association shows.

For all the latest Business News, download Indian Express App

Share your thoughts