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 Treasury Releases Semi-Annual Report to Congress on International Economic and Exchange Rate Policies



WASHINGTON - The U.S. Department of the Treasury today released the Semi-Annual Report to Congress on International Economic and Exchange Rate Policies that is required under Section 3005 of the Omnibus Trade and Competitiveness Act of 1988. The Report covers international economic and foreign exchange developments in the first half of 2013 and, where pertinent and available, data through end-September 2013.


Section 3004 requires Treasury to consider whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade. Based on the analysis in this report, Treasury has concluded that the standard identified in Section 3004 of the Act has not been met with respect to any of the countries covered in this Report for the period evaluated.


According to the report, there has been some progress on the goal of achieving strong, sustainable and balanced growth and the necessary exchange rate adjustments, but the record is mixed, and further progress is needed.


The RMB is appreciating, but not as fast or by as much as is needed. Treasury will carefully monitor the pace of RMB appreciation in China, and press for further policy changes consistent with market determination of the exchange rate, minimizing intervention, transparency with respect to intervention, and a level playing field for American workers and businesses. From June 2010, when China moved off its peg against the dollar, through mid-October 2013, the RMB has appreciated by a total of 12 percent against the dollar and 16 percent in inflation-adjusted terms. China’s current account surplus has fallen from over 10 percent at its peak to 2.5 percent today. On the other hand, the evidence that China has resumed large-scale purchases of foreign exchange this year, despite having accumulated reserves that are more than sufficient by any measure, is suggestive of actions that are impeding market determination and a currency that is significantly undervalued.


Additionally, we will closely monitor Japan's policies and the extent to which they support the growth of domestic demand.


Treasury will encourage those countries within the euro area with large and persistent surpluses to take action to boost domestic demand growth and shrink their surpluses in order to facilitate growth and rebalancing.


Also, we will urge the Republic of Korea to limit its foreign exchange interventions to the exceptional circumstances of disorderly market conditions and to commit to transparency with respect to foreign exchange intervention.


Treasury will push for comprehensive adherence to recent G-7 and G-20 commitments to move toward more market determined exchange rates, avoid persistent misalignment, and refrain from targeting exchange rates for competitive purposes.


The Report, along with past Reports, can be found at



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