U.S. Treasury Department Keeps China On Currency Manipulation Watch List

Last week, the U.S. Department of the Treasury released its semiannual report to Congress on developments in international economic and exchange rate policies for major U.S. trading partners.

The department found no partner, including China, has manipulated its exchange rates, but it did list seven countries for monitoring: China, Germany, Japan, Korea, Malaysia, Singapore, and Taiwan. (The department eliminated Vietnam from that list from its previous report.)

While Treasury did not label China as a currency manipulator, it criticized the country for failing to publish foreign exchange intervention information and lack of transparency around key features of its exchange-rate mechanism. According to Reuters, a senior Treasury official said efforts by the department and the International Monetary Fund have failed to make any headway with China on these issues.

Regarding Japan, another major U.S. trading partner, Reuters reported the department noted the country “had intervened in the foreign exchange market to stem the pace of depreciation in the yen, its first such move since 1998, and underscored its belief that such actions should be taken only rarely.”

Finally, the Treasury acknowledged Switzerland had once again exceeded U.S. thresholds for possible currency manipulation under a 2015 U.S. trade law. While the department did not brand Switzerland a currency manipulator, it said it would stay in close touch with Switzerland on its currency practices. Specifically, as Reuters explained, Treasury officials will continue enhanced analysis of Switzerland’s macroeconomic and exchange rate policies and continue an enhanced bilateral engagement that began in early 2021 to discuss Swiss policy options for tackling imbalances.