KUALA LUMPUR: Malaysia was removed from the US Treasury department monitoring list for currency manipulation as of November 2024 as it continued to only meet the significant bilateral surplus criterion, according to UOB Global Economics & Markets Research.
The firm had highlighted in its June 2024 report that Malaysia could be dropped from the list in the November 2024 review if it continued to meet no more than one of the three criterias for getting on the list.
The other two criteria are a material current account surplus and engaging in persistent, one-sided foreign exchange intervention.
"After the latest addition and removal, the US Treasury's latest Monitoring List was kept unchanged at seven members and included China, Germany, Singapore, Japan, Taiwan, Vietnam with the addition of South Korea."
"Japan, Taiwan, Vietnam, Germany and South Korea all met the two criteria for having a significant bilateral surplus and a material current account surplus, while Singapore met the criteria for engaging in persistent, one-sided foreign exchange intervention and having a material current account surplus," it said in a macroeconomic note.
According to UOB, China once again met only one of the three criteria for inclusion on the monitoring list.
However, UOB noted that it was not the primary focus of the November 2024 report, unlike previous reports during the Trump administration.
"The US Treasury still reserved its most pointed observations for China due to its "failure to publish foreign exchange intervention and broader lack of transparency around key features of its exchange rate mechanism make it an outlier among major economies, and warrants Treasury's close monitoring."
"And that, China remains on the monitoring list due to the size of the bilateral surplus with the United States and its lack of transparency on intervention data," it added.
UOB said the latest US Treasury report did not unsettle financial markets.
However, it cautioned that if the Trump administration returns to power, China could likely face renewed scrutiny over its foreign exchange (FX) practices.
"Recall that, former US Treasury Secretary Mnuchin, under the auspices of President Trump, labelled China as a currency manipulator in Aug 2019, for the first time since 1994."While the label was subsequently removed in the Jan 2020 report, it is not hard to imagine a repeat of this happening in the coming four years," the report said.