South Korea unlikely be named currency manipulator: Natixis

March 2, 2017

HONG KONG - South Korea has been listed on the US Treasury Department’s currency watch list, but global asset manager Natixis does not think the US will name South Korea as a currency manipulator at a time when (it) is already tangled in trade conflicts with China and Mexico.

The US Treasury Department has laid out three criteria for currency manipulation, namely 1) having a material current account surplus; 2) engaging in persistent one-sided intervention in the FX market and 3) enjoying a significant bilateral trade surplus with the US.

Natixis says that although South Korea’s large current account surplus (around 7% in 2016) may make itself prone to the first criterion as a currency manipulator, it does not think South Korea clearly fulfills criteria 2 and 3 to be indicated as having unfair currency practices.

Natixis says South Korea had a trade surplus with the US of just US$27.6bn in 2015 – a number that is equivalent to 8% and 31% of the China and Mexico surpluses against the US respectively – and that this should make the country less a prime target of Trump’s administration at this stage. (ATI).