South Korea Engages U.S. Over FX Monitoring After Treasury Calls Won Depreciation Excessive
Updated (4 articles)
Monitoring Designation Confirmed by Treasury South Korea appears in the U.S. Treasury’s Jan. 29, 2026 semiannual “Report to Congress” alongside nine other economies, marking its continued placement on the foreign‑exchange monitoring list [3][4]. The report cites a bilateral trade surplus of US$52 billion with the United States and a current‑account surplus equal to 5.9 % of GDP, both exceeding the thresholds of the 2015 Trade Facilitation and Trade Enforcement Act [3]. Meeting two of the three statutory criteria—trade surplus over $15 billion and current‑account surplus over 3 % of GDP—triggers the designation [3].
Treasury Labels Won Depreciation Excessive The Treasury’s assessment notes that the Korean won weakened further in late 2025, a move “not in line with Korea’s strong economic fundamentals” and characterizes the slide as “one‑sided and excessive” [2][3]. Treasury Secretary Scott Bessent described the depreciation as “undesirable” and inconsistent with the country’s underlying growth [2]. The language signals Washington’s concern that policy actions may be contributing to the currency’s rapid decline [2].
Seoul Initiates Direct Consultations with Washington senior official at Cheong Wa Dae confirmed that South Korean financial authorities are in close dialogue with the U.S. Treasury to clarify the monitoring status and address the Treasury’s concerns [1]. The Ministry of Economy and Finance pledged to expand mutual understanding and maintain cooperation on foreign‑exchange matters [2]. Both sources emphasize that ongoing consultations aim to stabilize the won and reassure U.S. policymakers [1][2].
Historical Context of List Removal and Re‑addition South Korea was removed from the monitoring list in November 2023—the first removal since April 2016—but was reinstated in November 2024 after a brief hiatus [1][2]. Since the November 2024 re‑addition, the country has remained on the list through the latest 2026 report [1][3]. The pattern underscores the Treasury’s procedural approach, focusing on macroeconomic thresholds rather than punitive intent [1].
Sources
-
1.
Yonhap: South Korea Engages U.S. Over Continued FX Monitoring Designation – Details Seoul’s active consultations with the Treasury following the Jan. 29, 2026 list inclusion and explains the trade‑surplus criteria behind the designation .
-
2.
Yonhap: South Korea Says U.S. Treasury Report Labels Won’s Depreciation as Excessive – Highlights the Treasury’s characterization of the won’s slide as “excessive,” cites Bessent’s remarks, and outlines Seoul’s pledge to cooperate on FX stability .
-
3.
Yonhap: U.S. Keeps South Korea on FX Monitoring List – Summarizes the semiannual report’s inclusion of South Korea, quantifies its trade and current‑account surpluses, and notes the Treasury’s routine filing process .
-
4.
Yonhap: U.S. Keeps South Korea on FX Monitoring List, Treasury Report Shows – Provides the same list details, adds that Thailand joins the monitoring roster for the first time, and describes the report’s congressional filing context .
Timeline
Apr 2016 – South Korea first appears on the U.S. foreign‑exchange monitoring list under the 2015 Trade Facilitation and Trade Enforcement Act, initiating formal U.S. scrutiny of its FX policies[1].
Nov 2023 – The United States removes South Korea from the monitoring list, the first removal since its 2016 inclusion, indicating a temporary easing of concerns[1].
Nov 2024 – The Treasury reinstates South Korea on the FX monitoring list, citing a bilateral trade surplus of US$52 billion and a current‑account surplus of 5.9 % of GDP that satisfy two of the three statutory thresholds[1][2].
2016 – South Korea’s bilateral trade surplus stands at US$18 billion, a pre‑pandemic baseline that later more than doubles, highlighting the scale of its external balances[2].
June 2025 – The semiannual Treasury “Report to Congress” records a US$52 billion trade surplus with the United States and a current‑account surplus equal to 5.9 % of GDP, both well above the 2015 Act thresholds[2].
Late 2025 – The won depreciates sharply; Treasury Secretary Scott Bessent calls the slide “undesirable” and “not consistent with Korea’s strong economic fundamentals,” labeling the weakness as excessive[2][3].
Jan 29, 2026 – The Treasury releases its latest semiannual report, keeping South Korea on the monitoring list alongside nine other economies and adding Thailand for the first time, reflecting ongoing U.S. vigilance of major trading partners[2][4].
Jan 30, 2026 – A senior South Korean presidential official confirms that financial authorities are in close, ongoing consultations with the U.S. Treasury to address the monitoring status and seek clarification[1].
Jan 30, 2026 – The Ministry of Economy and Finance states that the Treasury report explicitly describes the won’s depreciation as “excessive,” and pledges to expand mutual understanding and cooperation to stabilize the FX market[3].