The Treasury Department delivered its semiannual report to Congress on Macroeconomic and Foreign Exchange Policies of Major Trading Partners on June 16, with Treasury Secretary Janet Yellen saying the economy has been stronger than expected.
“The global economy has proven to be more resilient than many predicted at the time of our last report," she said in a release by the Treasury Department. "Nevertheless, Russia’s war against Ukraine continues to weigh on the outlook and has increased energy and food insecurity. Differing growth and inflation outlooks have led to a range of policy actions across countries, which, coupled with fundamentals including interest rate differentials, terms of trade shocks and longer-term growth expectations, have had large impacts on currencies."
The report reviewed and assessed the policies of major U.S. trading partners, the release stated, which account for around 80% of U.S. foreign trade in goods and services through December 2022.
One key finding of the report is that no major U.S. trading partner manipulated their currency exchange rates with the U.S. dollar to gain an unfair competitive advantage or hinder the balance of payments adjustments during the analyzed period. This indicates a level playing field in terms of currency practices among these trading partners.
The report, however, also called for increased transparency from China, expressing concern over China's failure to publish foreign exchange intervention data and its lack of transparency, which the treasury sets China apart from other major economies the Treasury monitors, Yellen said.
The Treasury's "Monitoring List" includes seven economies that "warrant close attention due to their currency practices and macroeconomic policies," the report read. Those included China, Korea, Germany, Malaysia, Singapore, Switzerland and Taiwan, which will be subject to ongoing scrutiny to ensure their practices align with fair and balanced global growth, the report added.
China has met standards to be monitored since October 2016, due to its significant bilateral trade surplus, but it remains on the Treasury's Monitoring List due to its lack of transparency, Yellen reported. Germany and Korea have met two criteria, including significant trade surpluses. Malaysia exceeded two criteria, and Singapore and Taiwan met two of the criteria, the Treasury reported. Switzerland, which previously met all criteria, exceeded only one.