US adds Thailand to currency watch list but finds no manipulators

 

 

 

The US Treasury has added Thailand to its monitoring list due to rising trade surpluses while intensifying scrutiny of global exchange rate policies.

 

The US Treasury announced on Thursday that it is strengthening its scrutiny of foreign exchange practices worldwide, including interventions designed to resist both the depreciation and appreciation of local currencies against the dollar. 

 

Despite the tighter oversight, the department did not formally accuse any major trading partner of currency manipulation.

 

In its latest semi-annual currency report, the Treasury stated that no major trading partner met all three criteria for enhanced analysis during the period covering the latter half of 2024 and the first six months of 2025.

 

However, Thailand was added to the "monitoring list" of nations warranting close attention. 

 

The Treasury cited the growth of the Southeast Asian nation’s global current account surplus and its significant trade surplus with the United States as the primary drivers for the decision.

 

Thailand now joins nine other economies on the list: China, Japan, South Korea, Taiwan, Singapore, Vietnam, Germany, Ireland, and Switzerland.

 

Traditionally, the report has focused on whether countries engage in one-sided intervention to prevent their currencies from strengthening, thereby keeping exports artificially cheap. 

 

Moving forward, the Treasury noted it will monitor more broadly whether economies that smooth exchange rate movements do so to resist depreciation pressure as aggressively as they resist appreciation.

 

 

 

No specific country targeted

When asked if these changes were intended to scrutinise Japan’s recent efforts to manage yen weakness, a Treasury official clarified that the shift was not designed to single out any one nation.

 

Instead, it is intended to bolster the department’s analysis for future reports, particularly during periods where the dollar may weaken against major currencies. The next report is due in November and will cover the second half of 2025.

 

The official added that the Treasury will specifically examine whether interventions to resist depreciation are "symmetrical" with previous efforts to resist appreciation.

 

Japan has recently struggled with a weak yen, with policymakers using calibrated communication to support the currency.

 

According to a source familiar with the matter who spoke to Reuters, Tokyo’s efforts received tacit backing from US authorities after the New York Federal Reserve conducted dollar/yen rate checks last week—a move often viewed as a precursor to formal intervention.

 

However, US Treasury Secretary Scott Bessent stated on Wednesday that the US was "absolutely not" intervening to support the yen.
 

 

 

Broader policy influences

For countries on the monitoring list, the Treasury indicated it will now analyse whether other government policies—such as capital controls, macroprudential measures, or the use of state investment vehicles and pension funds—are influencing foreign exchange markets.

 

The department will also study the use of foreign exchange swaps used to offset spot interventions, as well as the net forward positions of trading partners.

 

The Treasury’s three primary criteria for determining manipulation remain: a trade surplus with the US of at least $15 billion, a global current account surplus exceeding 3% of GDP, and persistent, one-way net foreign exchange purchases reaching 2% of GDP.

 

 

 

Focus on China

The Treasury declined to label China a currency manipulator, avoiding a potential escalation in trade tensions despite what it described as "depreciation pressure" on the yuan.

 

Nevertheless, the department maintained that China "stands out among our major trading partners in its lack of transparency around its exchange rate policies," echoing sentiments from its June 2025 report.

 

The Treasury warned that this lack of transparency would not preclude a future designation if evidence suggests Beijing is intervening through informal channels to resist yuan appreciation.