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Economy

Malaysia removed from US currency watchlist for meeting only one criterion​

By Faiqah Kamaruddin
November 17, 2024 @ 10:40am

Malaysia was removed from the US Treasury department monitoring list for currency manipulation as of November 2024 as it continued to only meet the significant bilateral surplus criterion, according to UOB Global Economics & Markets Research. STR/ AHMAD UKASYAH

KUALA LUMPUR: Malaysia was removed from the US Treasury department monitoring list for currency manipulation as of November 2024 as it continued to only meet the significant bilateral surplus criterion, according to UOB Global Economics & Markets Research.

The firm had highlighted in its June 2024 report that Malaysia could be dropped from the list in the November 2024 review if it continued to meet no more than one of the three criterias for getting on the list.

The other two criteria are a material current account surplus and engaging in persistent, one-sided foreign exchange intervention.

"After the latest addition and removal, the US Treasury's latest Monitoring List was kept unchanged at seven members and included China, Germany, Singapore, Japan, Taiwan, Vietnam with the addition of South Korea."

"Japan, Taiwan, Vietnam, Germany and South Korea all met the two criteria for having a significant bilateral surplus and a material current account surplus, while Singapore met the criteria for engaging in persistent, one-sided foreign exchange intervention and having a material current account surplus," it said in a macroeconomic note.

According to UOB, China once again met only one of the three criteria for inclusion on the monitoring list.

However, UOB noted that it was not the primary focus of the November 2024 report, unlike previous reports during the Trump administration.


"The US Treasury still reserved its most pointed observations for China due to its "failure to publish foreign exchange intervention and broader lack of transparency around key features of its exchange rate mechanism make it an outlier among major economies, and warrants Treasury's close monitoring."

"And that, China remains on the monitoring list due to the size of the bilateral surplus with the United States and its lack of transparency on intervention data," it added.

UOB said the latest US Treasury report did not unsettle financial markets.

However, it cautioned that if the Trump administration returns to power, China could likely face renewed scrutiny over its foreign exchange (FX) practices.

"Recall that, former US Treasury Secretary Mnuchin, under the auspices of President Trump, labelled China as a currency manipulator in Aug 2019, for the first time since 1994."While the label was subsequently removed in the Jan 2020 report, it is not hard to imagine a repeat of this happening in the coming four years," the report said.

 

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BNM: Malaysia's removal from US currency watch list affirms market-driven practices​

By Azanis Shahila Aman
November 15, 2024 @ 1:34pm

Bank Negara Malaysia (BNM). NSTP/ASYRAF HAMZAH

KUALA LUMPUR: Bank Negara Malaysia (BNM) has welcomed Malaysia's recent removal from the US currency monitoring list, viewing it as a positive affirmation of the country's market-driven currency practices.

BNM governor Datuk Seri Abdul Rasheed Ghaffour said Malaysia's exit from the list reflects the country's commitment to a market-determined exchange rate.

"We welcome this development with Malaysia being removed from the currency manipulation monitoring list."
"Malaysia has never used exchange rates to gain a competitive edge in the market. So, this reaffirms our confidence and solidifies our stance on this matter," Abdul Rasheed told a press conference here today.

The U.S. Department of Treasury had previously included Malaysia on the list, but recent assessments have led to its removal, signaling greater confidence in Malaysia's currency management approach.

According to a Treasury Department report released Thursday, the US has added South Korea to its "monitoring list" of major trading partners whose currency practices call for closer attention.

Besides South Korea, other economies on the monitoring list were China, Japan, Taiwan, Singapore, Vietnam, and Germany.

The semi-annual report looks into countries with large trade surpluses with respect to the United States that also actively intervene in foreign exchange markets to gain a competitive advantage.

It concluded that no major US trading partner manipulated its exchange rate to prevent "effective balance of payments adjustments" or gain unfair competitive advantage in global trade in the four quarters through June 2024.

 

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US Treasury finds no currency manipulation by major trading partners​

By David Lawder
November 15, 20246:46 AM GMT+8Updated 2 days ago

The American flag flies over the U.S. Treasury building in Washington, U.S., January 20, 2023. REUTERS/Jim Bourg/File Photo Purchase Licensing Rights


WASHINGTON, Nov 14 (Reuters) - No major U.S. trading partner manipulated its currency in the year to June 30, the Treasury Department said on Thursday in the Biden administration's final semi-annual currency report before turning over policing of foreign exchange practices to President-elect Donald Trump.

Trump, who has frequently complained that the strong dollar is eroding U.S. trade competitiveness, ended his first term in the White House with Treasury declarations of Vietnam and Switzerland as currency manipulators in December 2020 over their market interventions to weaken the value of their currencies.


Trump also directed then-Treasury Secretary Steven Mnuchin to label China a currency manipulator in August 2019, a move made at the height of U.S.-China trade tensions. The Treasury Department dropped the designation in January 2020 as Chinese officials arrived in Washington to sign a trade deal with the U.S.

For much of the past four years, however, foreign exchange interventions by U.S. trading partners have moved in the opposite direction, to push up the values of their currencies against the dollar, mainly to fight inflation.

President Joe Biden's term will end with the Treasury Department having made no manipulation declarations, but frequently raising concerns about China's foreign exchange practices in its semi-annual currency reports.

The department's latest analysis, opens new tab found that for the four quarters ended June 30, no major U.S. trading partners met all three criteria for "enhanced analysis" of their currency practices. That process leads to intensive consultations and can ultimately produce trade sanctions.

The Treasury Department said China, Japan, South Korea, Taiwan, Singapore, Vietnam and Germany were on its "monitoring list" for extra foreign exchange scrutiny.

Malaysia, which was on the previous report's list, dropped off, while South Korea was added due to its large global current account surplus and its sizable goods and services trade deficit with the U.S.

Countries that meet two of the criteria - a trade surplus with the U.S. of at least $15 billion, a global account surplus above 3% of GDP, and persistent, one-way net foreign exchange purchases - are automatically added to the list.

CHINA DISCREPANCIES​

China was kept on the monitoring list because of its large trade surplus with the U.S. and because of a lack of transparency surrounding its foreign exchange policies, the Treasury Department said.

The report noted that despite a slight decline in China's current account balance to 1.2% of GDP, its export volumes had risen sharply, indicating a decline in export prices. It said that trend continued beyond the monitoring period to the third quarter of 2024.

"Partially as a result of weak domestic demand, China has increasingly relied on foreign demand to drive growth this year, with net exports contributing an unusually high share (43%) of real growth in the third quarter," the report said.

"Thus, while the reported current account surplus is not material, the rapidly growing export volumes amid falling prices will likely have large impacts on China's trading partners."

The report also reiterated a call for more transparency in China's foreign exchange practices, including use of a daily fix to prevent weakening of the yuan without official explanation. It said these policies "make China an outlier among major economies and warrant Treasury's close monitoring."

Trump has vowed to impose tariffs of at least 60% on imported Chinese goods, regardless of Beijing's currency practices, and wants a 10%-20% duty on imports from the rest of the world.

The currency report said Japan was kept on the monitoring list because of its $65 billion trade surplus with the U.S. during the review period as well as an increase in its global current account surplus to 4.2% of GDP from 2% a year earlier.

The Treasury Department said Japan's Ministry of Finance had intervened three times since April to shore up the yen's value: on April 29, May 1 and July 11-12. It noted that Japan's actions were transparent, but reiterated that intervention "should be reserved only for very exceptional circumstances without prior consultations

 

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Berita berkaitan.

Taiwan's inclusion on U.S. currency monitoring list 'could become routine'​

11/16/2024 06:10 PM

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The Central Bank of the Republic of China (Taiwan) building in Taipei. CNA file photo

Taipei, Nov. 16 (CNA) The Central Bank of the Republic of China (Taiwan) has said it expects Taiwan's inclusion on the United States' currency monitoring list to become a regular occurrence.

The local central bank's comments came as the U.S. Department of Treasury on Thursday (U.S. time) again placed Taiwan on its list of major trading partners that merit close attention to their currency practices and macroeconomic policies.

In a recent statement, Taiwan's central bank said communications channels between Taiwan and the U.S. were well founded to allow both sides to have a comprehensive view exchanges for a better understanding of each side's economic and foreign exchange policies.

Also included on the U.S. Department of Treasury's watchlist were China, Japan, South Korea, Singapore, Vietnam, and Germany, in accordance with the Omnibus Trade and Competitiveness Act of 1988 applied by the report, which analyzed the practices of Washington's major trading partners.

This is Taiwan's sixth straight appearance on the twice-yearly list, while South Korea returned to the list for the first time since November 2023.

None of Washington's major trading partners was named a currency manipulator, referring to those economies believed to be taking advantage of manipulation of the exchange rate between its currency and the U.S. dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade during the four quarters through June 2024, the U.S. Treasury said.
The U.S. Treasury report uses three criteria to determine which trading partners will be named as currency manipulators.

The three criteria include a bilateral trade surplus with the U.S. hitting at least US$15 billion and a material current account surplus accounting for at least 3 percent of an economy's gross domestic product (GDP).

The third is designed to assess whether an economy gets involved in persistent one-sided intervention in the foreign exchange market when net purchases of foreign currency are conducted repeatedly, in at least eight out of 12 months, with these net purchases making up at least 2 percent of its GDP over a 12-month period.

When an economy meets two of the three criteria, it will be automatically put on the watch list.

When an economy meets just one of the three criteria for two currency reports in a row, it will be removed from the monitoring list.

If an economy meets all three criteria, it will be named a currency manipulator.
The local central bank said Taiwan met the first two criteria as the country enjoyed a trade surplus of US$57 billion during the four quarters to June, and a surplus in its current account, which mainly measures the exports and imports of a country's merchandise and services, was equivalent to 14.7 percent of its GDP.

The central bank said that as Taiwan is an export-oriented economy and demand for Taiwan-made information and communications items from the U.S. market is robust, a trade surplus with the U.S. has been on the rise.

Since 2018, the local central bank said, Taiwan's increasing trade surplus with the U.S. largely reflected demand for gadgets in particular chips used in emerging technologies such as artificial intelligence applications.

Other factors included business opportunities created by remote working and schooling, and escalating trade tensions between Washington and Beijing, it added.

Therefore, the growth in trade surplus with the U.S. has had nothing to do with any currency manipulation, the local central bank said.

The central bank added that Taiwan's large current account surplus largely reflected the country's huge accumulated excess savings.

In a written report submitted to the Legislative Yuan earlier this week, the central bank suggested Taiwan expand its purchases of energy and agricultural goods as well as military items from the U.S. in a bid to reduce a trade surplus.

The U.S. Treasury said in the report that Taiwan should closely monitor non-bank financial sector risks, including foreign exchange risks, while foreign exchange intervention should be limited and allow currency movements in line with economic fundamentals.

 

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For the list, it uses three criteria to assess whether a country has manipulated its foreign exchange rates to gain an unfair trade advantage.

1. If it had a trade surplus with the United States of at least $15 billion.

2. A current account surplus of at least 3 percent of gross domestic product.

3. If it had engaged in persistent, one-sided intervention in foreign exchange markets.

 

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Malaysia dikeluarkan daripada senarai pemantauan AS terhadap mata wang​

Oleh AFP
November 15, 2024 @ 10:22am

Malaysia sebelum ini berada dalam senaraian pemantauan AS terhadap amalan perdagangan mata wang - NSTP/MOHAMAD SHAHRIL BADRI SAALI

WASHINGTON: Malaysia telah dikeluarkan daripada 'senarai pemantauan' mata wang rakan dagangan Amerika Syarikat (AS), demikian menurut laporan Jabatan Perbendaharaan AS.

AS telah menambah Korea Selatan ke dalam 'senarai pemantauan' rakan dagangan utama yang amalan mata wangnya memerlukan perhatian yang lebih dekat.

Laporan separuh tahunan itu melihat kepada negara-negara yang mempunyai lebihan perdagangan yang besar berkait dengan AS yang turut campur tangan secara aktif dalam pasaran pertukaran asing bagi mendapatkan kelebihan daya saing.

Ia membuat kesimpulan bahawa tiada rakan dagangan utama AS yang memanipulasi kadar pertukarannya untuk menghalang 'pelarasan imbangan pembayaran yang berkesan' atau memperoleh kelebihan daya saing tidak adil dalam perdagangan global dalam empat suku sehingga Jun 2024.

Selain Korea Selatan, ekonomi lain dalam senarai pemantauan ialah China, Jepun, Taiwan, Singapura, Vietnam dan Jerman.

Daripada kumpulan itu, Jepun, Korea Selatan, Taiwan, Vietnam dan Jerman memenuhi dua daripada tiga kriteria untuk merit analisis yang dipertingkatkan.

Negara terbabit 'mempunyai lebihan perdagangan dua hala yang besar dengan AS dan lebihan akaun semasa yang material'.

Singapura dikatakan terbabit dalam 'campur tangan pertukaran asing yang berterusan dan berat sebelah'.

Mengekalkan China dalam senarai, Perbendaharaan memetik 'kegagalan negara itu untuk menerbitkan campur tangan pertukaran asing dan kekurangan ketelusan yang lebih luas mengenai ciri-ciri utama mekanisme kadar pertukaran'.

Perbendaharaan menggelar China sebagai 'terpencil dalam kalangan ekonomi utama', sambil menambah bahawa Beijing juga memegang 'ketidakseimbangan perdagangan yang terlalu besar dengan AS'.

"Perbendaharaan dengan tegas menyokong rakan dagangan utama kami menerima pakai dasar yang menyokong pertumbuhan global yang kukuh, mampan dan seimbang serta mengurangkan ketidakseimbangan luaran yang berlebihan," kata Setiausaha Perbendaharaan, Janet Yellen dalam satu kenyataan.
-AFP

 

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WHAT IS THE WATCH LIST ABOUT?

American news site CNBC reported that a 1988 law requires the US Treasury Department to report to the US Congress every six months on whether any countries are manipulating their currencies to gain trade advantages over the US.

If deemed to be a currency manipulator, US could impose trade sanctions.
Simply put, it means that a country is artificially weakening its own currency by selling its own currency in exchange for a foreign currency, usually the US dollar. This would have the effect of making its own exports cheaper, thereby gaining an unfair trade advantage over another country’s exports.

US had accused three economies of being currency manipulators in the past, the latest being China 25 years ago.

Japan was stamped with that label in 1988 and Taiwan, in 1988 and 1992.

 

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Fadhli Saari?

 

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