Korea Currency Monitoring
U.S. Treasury Keeps South Korea on Currency Monitor List Amid Won Depreciation
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Key Points
1
The Treasury's currency monitoring roster comprises 10 economies, and Korea is listed alongside not only Japan, China, Germany and Singapore, but also Taiwan, Thailand, Vietnam, Ireland and Switzerland.
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The U.S. criteria for monitoring require two of three conditions: a bilateral U.S. goods/services trade surplus of at least $15 billion, a current account surplus of at least 3% of GDP, and persistent, one-sided FX intervention for eight months with net purchases of at least 2% of GDP.
3
South Korea posted a $45 billion bilateral trade surplus with the United States and a current account surplus of about 6.6% of GDP, but its net foreign exchange market intervention was negative 1.5% of GDP, meaning it did not meet the FX-intervention criterion.
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Despite large external surpluses, the won has faced persistent depreciation pressure, with Korean authorities net-selling foreign exchange in the period (notably in late 2025); the Treasury also notes progress in reforms to Korea's FX market, including easing restrictions on foreign investor participation to improve liquidity and price discovery.
The U.S. Treasury has kept South Korea on its currency monitoring list for the fourth consecutive time since mid-2024, according to Seoul Economic Daily. South Korea meets two of the three criteria required for the designation — a $45 billion bilateral trade surplus with the U.S. and a current account surplus of about 6.6% of GDP — but falls short on the foreign exchange intervention threshold.
The updated watchlist includes 10 economies: China, Japan, Germany, Singapore, Taiwan, Thailand, Vietnam, Ireland, Switzerland, and South Korea, Kyodo News reported. Korea's status is unchanged from the January report.
Why South Korea Stayed on the Watchlist
The U.S. uses three criteria to flag economies. A country lands on the watchlist if it meets any two: a bilateral goods and services trade surplus of at least $15 billion, a current account surplus of at least 3% of GDP, and persistent one-sided currency intervention for eight months with net purchases of at least 2% of GDP.
South Korea cleared the first two bars easily. Its $45 billion trade surplus with the U.S. and 6.6% of GDP current account surplus are both well above the thresholds, Korea JoongAng Daily reported. But its net foreign exchange intervention was negative 1.5% of GDP — meaning Korea was actually selling foreign currency, not buying it — so it missed the third criterion.
The Won's Slide Creates an Unusual Problem
Normally, a country with large trade and current account surpluses would see its currency rise in value. South Korea is the opposite case. The won has faced sustained depreciation pressure, and Korean authorities have been net-selling foreign exchange — especially in late 2024 — to slow the won's fall, Bitget reported.
That pressure is one reason the Treasury keeps a close eye on Korea. A weak won makes Korean exports cheaper abroad, which can give Korean companies an edge over U.S. rivals. The Treasury wants to make sure any currency weakness reflects market forces, not policy choices.
Korea's FX Market Reforms Earn U.S. Praise
The Treasury did not only flag concerns. It also noted progress in South Korea's efforts to open up its foreign exchange market. Korea has eased restrictions on foreign investor participation, a move designed to improve liquidity and make currency pricing more transparent, according to Korea Herald.
These reforms matter to Washington. A more open FX market is harder to manipulate and easier to monitor. The Treasury's acknowledgment suggests Seoul's policy changes are moving in the right direction, even as scrutiny of its exchange-rate practices continues.
Korea's On-and-Off History with the Watchlist
South Korea's presence on the list is not new. It was briefly removed in 2023, a sign of progress. But the Treasury reinstated it in November 2024, and Korea has remained on the list every report since, Korea JoongAng Daily noted. That is now four straight designations.
Being on the monitoring list does not mean a country is cheating. It is a step below the most serious label — "currency manipulator" — which the U.S. has not applied to Korea. Still, the designation puts pressure on Seoul to keep its exchange-rate policies transparent and market-driven.
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