Currency News: Be Careful, the US is Watching you!
Currency News
The U.S. government is warning countries it suspects are manipulating their currencies. Indeed, a Treasury report pointed out five countries: China, Japan, Korea, Taiwan, and Germany. Each meets at least two of the three criteria that “determine whether an economy may be pursuing foreign exchange policies that could give it an unfair competitive advantage against the United States” the report said.
At a time when currency devaluation has become a major tool used by multiple countries to stimulate growth, the U.S. is looking to protect its own interests. The report is an outgrowth of the Trade Facilitation and Trade Enforcement Act of 2015, a bipartisan effort aimed at stemming the global race to the bottom.
The criteria In order to determine whether a country should be on the “Monitoring List” of countries due to unfair currency practices, a country needs to meet the following criteria: a trade surplus larger than $20 billion (0.1% of U.S. GDP); a trade surplus with the U.S. that is more than 3% of that country’s GDP; purchases of foreign currency amounting to more than 2% of the country’s GDP in a one-year period.
No country meets all three criteria, according to the report. However, the five countries on the list meet at least two.
