A plan to label China a currency manipulator, a pledge by US President-elect Donald Trump, might drag South Korea onto the manipulation list, according to analysis by a government-backed research center Thursday.
In order to officially designate China a currency manipulator, the US needs to relax its existing standards or make new ones, the report by the Korea Institute for International Economic Policy said.
“In such a case, it is likely that South Korea will be also subject to fall in the standards.”
According to the final currency report under President Barack Obama in October 2016, China and South Korea along with four other countries are in its foreign exchange “monitoring list” of countries with high external surpluses or currency market interventions. None of its major trading partners are currency manipulators for the 12 months through June 2016, according to the currency report.
US President-elect Donald Trump warned that his administration would take an immediate step to legally declare China as a currency manipulator within his first 100 days of taking office.
If the US takes such steps in the first half of the year, South Korea would suffer from indirect consequences, such as China’s possible retaliation in trade, according to the report.
However, the KIEP report projects that such labeling would likely be delayed to the second half of the year and the US and China would spend time in negotiation at the beginning of the Trump administration.
Meanwhile, First Vice Minister of the Ministry of Strategy and Finance Choi Sang-mok on Thursday played down the possibility of being designated a foreign exchange manipulator.
“Considering the standards of manipulating currencies set by the US, it is not likely to happen,” he said
“The government fully respects free movements in the market and takes minimal measures when there is a drastic volatility movement and the US government knows it.”
By Park Ga-young (email@example.com