US adds Switzerland to currency monitoring list, eyeing China

None of the United States’ major trading partners has been designated as manipulating its currency — including China — the Treasury Department said Friday, although Switzerland was added to a “monitoring list.”

China also warrants close observation, the Treasury added in a biannual report to Congress, over its failure to publish information on foreign exchange interventions and a “broader lack of transparency around key features of its exchange rate mechanism.”

The report looks at countries with big trade surpluses that actively intervene in foreign exchange markets to gain trade advantages.

“Most foreign exchange intervention by US trading partners last year was in the form of selling dollars, actions that served to strengthen their currencies,” said Treasury Secretary Janet Yellen in a statement.

She added that although the global economy has been more resilient than many expected, Russia’s war on Ukraine weighs on the outlook and has increased energy and food insecurity.

In the latest report, seven economies are on the Treasury’s monitoring list of key trading partners that merit close attention to their currency practices and policies.

These are China, South Korea, Germany, Malaysia, Singapore, Switzerland and Taiwan.

Switzerland was declared a currency manipulator in December 2020 and became the subject of “enhanced” discussions, although it was removed from the monitoring list last year.

A Treasury official noted that there remain concerns with its current account balance, adding that both sides continue to discuss ways to address this.

China’s trade imbalance with the United States was another factor keeping it on the list, the official added. But Japan was removed in the latest report.

Beijing has long faced scrutiny, with Washington frequently accusing the government of keeping the exchange rate artificially low via its massive stockpile of US dollars, undermining US manufacturers and workers.

The criteria considered by the Treasury are a large trade surplus with the United States, a significant current account surplus and evidence of “persistent, one-sided intervention” in foreign exchange markets.