The US Department of the Treasury added South Korea to a “monitoring list” for foreign exchange practices that includes Japan and Germany, and reiterated its criticism of China’s lack of transparency with regard to managing its currency.
In its semiannual foreign exchange report released on Thursday, the Treasury also concluded that “no major US trading partner manipulated the rate of exchange between its currency and the US dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.”
The last time the Treasury designated a country as a manipulator was in 2019, under then-US president Donald Trump, when it put the label on China. The tag was dropped five months later as a bilateral trade deal was negotiated. Thursday’s is the last report under the administration of US President Joe Biden.
Photo: Ahn Young-joon, AP
The economies on the Treasury’s monitoring list were mostly unchanged from the previous release in June, and include Taiwan, China, South Korea, Japan, Germany, Singapore and Vietnam. Malaysia, which was in June’s report, was dropped in the latest one.
When a trading partner meets two of three criteria under a 2015 law, it is placed on the monitoring list for “enhanced analysis.”
South Korea was added after meeting two of the criteria, with a significant global current-account surplus and its bilateral surplus with the US, a Treasury official said.
The South Korean finance ministry declined to comment.
The won slipped as much as 0.5 percent in trading early yesterday.
The general stance of policymakers is that the exchange rate is determined by the market, but steps, or so-called “smoothing operations,” can be taken on excessive volatility. In April, South Korean authorities issued a rare warning to market participants after the won briefly weakened to a key level.
Thursday’s report covers the four quarters through June.
More recently, the US dollar has been climbing amid rising doubts about how low the US Federal Reserve would take its benchmark interest rate next year.
Expectations for faster inflation under Trump’s incoming administration, thanks in part to tariff increases, have added further impulse to the greenback this month.
That appreciation has put major strains on net importers of US dollar-priced commodities such as oil, as well as on those countries bearing US dollar-denominated debt.
While the congressionally mandated report is designed to pressure trading partners perceived to be artificially holding down their exchange rates for competitive advantage, the strong US dollar has meant that interventions around the world lately have been designed to prop up local currencies.
The Treasury reiterated its call for greater transparency in Beijing’s exchange-rate policy.
“China’s failure to publish foreign exchange intervention and broader lack of transparency around key features of its exchange rate policy make China an outlier among major economies and warrant Treasury’s close monitoring,” the department said.
A manipulator designation has no specific or immediate consequence, but the law requires the administration to engage with those trading partners to address the perceived exchange-rate imbalance.
Penalties, including exclusion from US government contracts, could be applied after a year.
In Taipei, the central bank yesterday said it has carried out its duty in line with the US recommendations that it should closely monitor non-bank financial sector risks, including foreign exchange risks.
It agreed that foreign exchange interventions should be limited and allow currency movements in line with economic fundamentals. The central bank stepped in this year mostly in support of the local currency, rather than slow its rise.
Additional reporting by Crystal Hsu
SEMICONDUCTORS: The German laser and plasma generator company will expand its local services as its specialized offerings support Taiwan’s semiconductor industries Trumpf SE + Co KG, a global leader in supplying laser technology and plasma generators used in chip production, is expanding its investments in Taiwan in an effort to deeply integrate into the global semiconductor supply chain in the pursuit of growth. The company, headquartered in Ditzingen, Germany, has invested significantly in a newly inaugurated regional technical center for plasma generators in Taoyuan, its latest expansion in Taiwan after being engaged in various industries for more than 25 years. The center, the first of its kind Trumpf built outside Germany, aims to serve customers from Taiwan, Japan, Southeast Asia and South Korea,
Gasoline and diesel prices at domestic fuel stations are to fall NT$0.2 per liter this week, down for a second consecutive week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) announced yesterday. Effective today, gasoline prices at CPC and Formosa stations are to drop to NT$26.4, NT$27.9 and NT$29.9 per liter for 92, 95 and 98-octane unleaded gasoline respectively, the companies said in separate statements. The price of premium diesel is to fall to NT$24.8 per liter at CPC stations and NT$24.6 at Formosa pumps, they said. The price adjustments came even as international crude oil prices rose last week, as traders
SIZE MATTERS: TSMC started phasing out 8-inch wafer production last year, while Samsung is more aggressively retiring 8-inch capacity, TrendForce said Chipmakers are expected to raise prices of 8-inch wafers by up to 20 percent this year on concern over supply constraints as major contract chipmakers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co gradually retire less advanced wafer capacity, TrendForce Corp (集邦科技) said yesterday. It is the first significant across-the-board price hike since a global semiconductor correction in 2023, the Taipei-based market researcher said in a report. Global 8-inch wafer capacity slid 0.3 percent year-on-year last year, although 8-inch wafer prices still hovered at relatively stable levels throughout the year, TrendForce said. The downward trend is expected to continue this year,
POWERING UP: PSUs for AI servers made up about 50% of Delta’s total server PSU revenue during the first three quarters of last year, the company said Power supply and electronic components maker Delta Electronics Inc (台達電) reported record-high revenue of NT$161.61 billion (US$5.11 billion) for last quarter and said it remains positive about this quarter. Last quarter’s figure was up 7.6 percent from the previous quarter and 41.51 percent higher than a year earlier, and largely in line with Yuanta Securities Investment Consulting Co’s (元大投顧) forecast of NT$160 billion. Delta’s annual revenue last year rose 31.76 percent year-on-year to NT$554.89 billion, also a record high for the company. Its strong performance reflected continued demand for high-performance power solutions and advanced liquid-cooling products used in artificial intelligence (AI) data centers,
RSS