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WASHINGTON (Jiji Press) — The U.S. Department of the Treasury said in a semiannual report released on Friday that it has kept Japan and China, which both run a large trade surplus with the United States, on its monitoring list over their currency practices.
No U.S. trading partner was designated as a currency manipulator, but the department urged Taiwan and Vietnam to take corrective action as they may be named as manipulators.
It was the second semiannual currency report to Congress published by the administration of U.S. President Joe Biden.
The administration of his immediate predecessor, Donald Trump, designated China, Vietnam and Switzerland as currency manipulators. But the Biden administration, which places emphasis on international coordination, made a policy reversal and called for remedial measures by the three countries.
A total of 12 countries were placed on the watch list, also including South Korea, Germany and Switzerland.
In the report, the department expressed concerns over Japan’s continued surplus with the United States.
While noting that Japan has not intervened in foreign exchange markets since 2011, the report warned the country against guiding the yen lower, saying, “Treasury’s firm expectation is that in large, freely traded exchange markets, intervention should be reserved only for very exceptional circumstances with appropriate prior consultations.”
On China, which has a larger bilateral trade surplus than any other U.S. trading partner, the report said, “China’s exchange rate practices and policies continue to lack transparency, including its lack of disclosure regarding intervention in foreign exchange markets.”
“The activities of state-owned banks in particular warrant Treasury’s close monitoring,” it said.
The semiannual Treasury report seeks to identify any major trading partner that runs a significant bilateral trade surplus with the United States, has a material current account surplus and engaged in persistent one-sided intervention in foreign exchange markets.
A trading partner can be designated as a currency manipulator and face sanctions if it satisfies all three criteria, and put on the monitoring list if it meets two of them.
