Korea to be on US currency watch list: finance minister

By Park Hyong-ki

Korea is not likely to be branded as a currency manipulator in the U.S. Department of Treasury’s foreign exchange report to Congress this month.

However, it is expected Korea will remain on the U.S. currency monitoring list due to the country’s trade surplus with the world’s largest economy.

This is because Finance Minister Kim Dong-yeon has sufficiently explained to his U.S. counterpart Treasury Secretary Steven Mnuchin that Seoul has not intervened in the currency market to intentionally depreciate the won to boost exports, the finance ministry said Sunday.

The Bank of Korea has maintained it only sells and buys dollars and wons to stabilize the currency market.

Kim met Mnuchin on the sidelines of the G20 and International Monetary Fund’s financial leaders’ conference in the United States.

There, the finance minister also held meetings with three global credit rating agencies, explaining to them of South Korea’s sound economic fundamentals in the face of growing risks on North Korea’s nuclear program and South Korea’s high household debt.

He said Korea’s economy has maintained strong countermeasures that can withstand North Korean threats, and its household debt is “manageable.”

The U.S. Treasury releases its currency report twice a year.

In April this year, Korea was able to avoid being labeled a currency manipulator, but the country remained on the U.S. currency watch list because of Seoul's "significant trade surplus with the U.S. and the undervalued won."

The report said that Korea's undervaluation has backed its large current account surplus.

President Donald Trump has criticized countries including China, Germany and Korea for manipulating their currencies to gain an export edge, and calling its free trade deals such as with Seoul a “job killer.

The U.S. is seemingly using its currency classification report as leverage in the renegotiations of the free trade agreement with Korea to get a better deal for the U.S. as part of Trump’s America First policy.

The U.S. designated Korea a currency manipulator in 1988. Its bilateral free trade deal with Korea has been in effect since 2012.