The U.S. Treasury Department said Thursday it has once again put Japan on a list of major trading partners that it monitors for potentially unfair foreign exchange practices.
It is the first time since June last year for Japan to be on the “monitoring” list. In its biannual report to Congress, the department also placed six other economies on the list — China, Germany, Malaysia, Singapore, Taiwan and Vietnam.
The department said Japan, Germany, Taiwan and Vietnam all met the criteria for having a significant trade surplus with the United States as well as a notable current account surplus.
File photo taken in August 2023 shows U.S. Treasury Department building in Washington. (Kyodo)
For the list, it uses three criteria to assess whether a country has manipulated its foreign exchange rates to gain an unfair trade advantage.
A country would meet all three if it had a trade surplus with the United States of at least $15 billion, a current account surplus of at least 3 percent of gross domestic product, and if it had engaged in persistent, one-sided intervention in foreign exchange markets.
The report covered economic data from the 20 largest U.S. trading partners for the four quarters through December 2023.
Without criticism, it mentioned that Japanese authorities intervened in foreign exchange markets in April and May for the first time since October 2022, in an attempt to deal with the yen’s rapid depreciation against the U.S. dollar.
The report said the department’s “expectation is that in large, freely traded exchange markets, intervention should be reserved only for very exceptional circumstances with appropriate prior consultations.”
“Japan is transparent with respect to foreign exchange operations, regularly publishing its foreign exchange interventions each month,” it added.
Japan was on the list for many years until June 2023, as it had met the same two criteria.
The department did not designate any trading partner as a currency manipulator, which could result in the imposition of U.S. sanctions.
Nonetheless, the report provided more information on China than on the other countries, pointing out issues such as anomalies in Beijing’s current account data.
It reiterated that China’s failure to disclose foreign exchange interventions and its lack of transparency around key features of its exchange rate system makes it “an outlier among major economies.”
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