US Treasury Currency Report

This Report assesses developments in international economic and exchange rate policies over the four quarters through June 2025 (the official Report period) and more recent developments where data are available. The analysis in this Report is guided by Sections 3001-3006 of the Omnibus Trade and Competitiveness Act of 1988 (1988 Act) (codified at 22 U.S.C. §§ 5301-5306) and Sections 701 and 702 of the Trade Facilitation and Trade Enforcement Act of 2015 (2015 Act) (codified at 19 U.S.C. §§ 4421-4422), as discussed in Section 1 of this Report. Treasury reviews developments in the 20 largest trading partners of the United States over the period of review. These economies accounted for about 78% of U.S. trade in goods and services over the four quarters through June 2025. President Trump is committed to pursuing economic and trade policies that will spur an American revitalization marked by strong economic growth, the elimination of destructive trade deficits, and countering unfair trade practices. For decades, unfair currency practices abroad have contributed to the U.S. trade deficit and the hollowing out of U.S. manufacturing employment. When a trading partner engages excessively in foreign exchange market interventions or other actions to artificially lower the value or suppress appreciation of its currency, this distorts market-based competition, promoting domestic production and exports and suppressing imports in ways that do not reflect the productivity of economies or competitiveness of traded goods. Treasury is closely monitoring whether our trading partners may act through foreign exchange intervention and non-market policies and practices to manipulat *TREASURY SAYS YUAN 'SUBSTANTIALLY UNDERVALUED' *US CALLS ON CHINA TO ALLOW YUAN TO STRENGTHEN IN TIMELY MANNER

President Trump is committed to pursuing economic and trade policies that will spur an American revitalization marked by strong economic growth, the elimination of destructive trade deficits, and countering unfair trade practices. This includes combatting unfair currency practices that facilitate competitive advantage, such as unwarranted intervention in currency markets. In this Administration, the Secretary of the Treasury will be vigilant in identifying and taking action against currency manipulation. Treasury will also examine other macroeconomic and financial policies implemented by our trading partners that propagate imbalances or result in an unfair competitive advantage in trade. For decades, unfair currency practices abroad have contributed to the U.S. trade deficit and hollowed out U.S. manufacturing employment. When a trading partner engages excessively in foreign exchange market interventions or other actions to artificially lower the value or suppress appreciation of its currency, this distorts market-based competition, promoting domestic production and exports, and suppressing imports, in ways that do not reflect the productivity of economies or competitiveness of traded goods. There has been a decline in the scale and persistence of foreign exchange intervention among most major U.S. trading partners in recent years, but the damage done is long lasting, including through the reallocation of supply chains and their associated quality jobs, as well as the loss of the homeland’s ability to manufacture critical defense and industrial equipment. The economic and national security implications are self-evident. In very recent years the dollar has generally been strong relative to historical averages, and there have been less persistent appreciation pressures across other currencies. Treasury is closely monitoring whether our trading partners may act through foreign exchange intervention, or non-market policies and practices, to manipulate their currencies for unfair competitive advantage in trade and prevent the swift recovery of American economic strength. In this context, Treasury will continue to monitor closely the extent to which intervention by our trading partners is two-way, and whether economies that choose to smooth exchange rate movements resist depreciation pressure in the same manner as appreciation pressure. U.S. TREASURY SAYS SEMI-ANNUAL CURRENCY REPORT FOUND NO MAJOR U.S. TRADING PARTNERS MANIPULATED CURRENCY TO GAIN UNFAIR TRADE ADVANTAGE IN FOUR QUARTERS THROUGH DECEMBER 2024 U.S. TREASURY: MONITORING LIST OF TRADING PARTNERS WHOSE CURRENCY PRACTICES 'MERIT CLOSE ATTENTION' INCLUDES CHINA, JAPAN, SOUTH KOREA, SINGAPORE, TAIWAN, VIETNAM, GERMANY, IRELAND AND SWITZERLAND U.S. TREASURY: WHILE CHINA IS NOT LABELED A CURRENCY MANIPULATOR AMID YUAN DEPRECIATION PRESSURE, CHINA STANDS OUT AMONG TRADING PARTNERS FOR LACK OF TRANSPARENCY ON EXCHANGE RATE PRACTICES AND POLICIES

The global economy continues to show strength and is poised to make a soft landing. The IMF projects global growth of 3.3% in 2024 on a Q4 over Q4 basis, and high frequency measures of production and prevailing business conditions suggest global economic activity remains solid. As the world’s largest economy, America’s strong economic performance is serving as a key engine for resilient global growth. Global headline inflation has declined from a peak of 7.3% in September 2022 to 2.4% in July 2024. Declining inflation reflects lower food and energy prices, and generally lower goods prices as monetary tightening has eased price pressures. Most economies are on track to return inflation to central bank targets by next year. Labor markets across the world’s largest economies remain robust and, across the G20, unemployment rates remain at, or very close to, their lowest rate since the onset of the pandemic. The risks to the global economic outlook have become more balanced on net over the past year, though Russia’s war against Ukraine and the risk of wider conflict in the Middle East continue to be a risk to the outlook with the possibility of volatility among critical commodity prices and increased energy and food insecurity. Global current accoun US TREASURY: THE SEMI-ANNUAL CURRENCY REPORT FOUND NO MAJOR US TRADING PARTNERS MANIPULATED CURRENCY TO GAIN UNFAIR TRADE ADVANTAGE IN FOUR QUARTERS THROUGH JUNE 2024. US TREASURY: CHINA'S FAILURE TO PUBLISH FOREIGN EXCHANGE INTERVENTION DATA AND LACK OF EXCHANGE RATE POLICY TRANSPARENCY MAKE CHINA AN OUTLIER, AND WARRANTS CLOSE MONITORING.

Global economic growth in 2023 was stronger than many had forecast and projections for 2024 have been revised up. The IMF estimates global growth was 3.2% in 2023, outperforming its own projection of 2.9% as of April 2023 (measured on a Q4 over Q4 basis). The upward revision was in large part due to stronger than projected growth in the United States; in April 2023 the IMF projected U.S. growth in 2023 to be 1.0 percent while it came in at a robust 3.1 percent (Q4 over Q4 basis). Many emerging market and developing economies have fared better than expected thanks in part to improved terms of trade for some, proactive monetary policy, and a healthy build-up of external buffers. The IMF projects global growth to remain steady in 2024, before slowing slightly to 3.1% in 2025. The risks to the global economic outlook have become more balanced on net over the past year, though Russia’s war against Ukraine continues to weigh on the outlook after introducing volatility among critical commodity prices, which increased energy and food insecurity and exacerbated inflation. US TREASURY ADDS JAPAN TO FOREIGN EXCHANGE MONITORING LIST. MORE US TSY SEMIANNUAL FX RPT: CANNOT CURRENTLY ASSESS ANOMALIES IN CHINA'S FX DATA; FALL IN INVESTMENT ONCOME 'UNEXPECTED' #USFXrpt #China #exchange_rates #USTreasury TREASURY: JAPAN INTERVENED IN CURRENCY MARKET IN APRIL AND MAY 2024 TO BUY YEN, SELL DOLLARS, STRENGTHENING YEN'S VALUE

The U.S. Department of the Treasury delivered its semiannual Report to Congress on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States. In this Report, Treasury reviewed and assessed the policies of major U.S. trading partners, comprising about 78 percent of U.S. foreign trade in goods and services, during the four quarters through June 2023. “The global economy continues to be more resilient than many predicted one year ago. Nevertheless, the global economic outlook continues to face elevated uncertainty associated with Russia’s war against Ukraine, geopolitical stresses in the Middle East, still-elevated core inflation, and the potential for stresses in China’s property sector to deepen. Most foreign exchange intervention by U.S. trading partners over the Report period was in the form of selling dollars, actions that served to strengthen their currencies. However, Treasury remains vigilant to countries’ currency practices and the Biden Administration strongly opposes attempts by the United States’ trading partners to artificially manipulate currency values to gain unfair advantage over American workers,” said Secretary of the Treasury Janet L. Yellen. In accordance with the Omnibus Trade and Competitiveness Act of 1988, the Report analyzed the practices of the United States’ major trading partners and concludes that no major U.S. trading partner manipulated the rate of exchange between its currency and the U.S. dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade during the four quarters through June 2023. In this Report, Treasury found that no major trading partner met all three criteria for enhanced analysis under the Trade Facilitation and Trade Enforcement Act of 2015 during the four quarters ending June 2023. Six economies are on Treasury’s “Monitoring List” of major trading partners th Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States, November 2023 Global economic growth in both 2022 and so far in 2023 has been stronger than expected. The IMF estimates global growth was 2.2% in 2022 (measured on a Q4/Q4 basis), outperforming the projection of 1.7% it made in October 2022. It projects global growth to increase to 2.9% in 2023 and further to 3.2% in 2024 on the same Q4/Q4 basis. Prices of commodities like food and energy have become less volatile, supply chain pressures continued to ease, and in some countries domestic demand received a boost from excess savings. Despite more resilient near-term performance, the global economic outlook continues to face elevated uncertainty associated with Russia’s war against Ukraine, geopolitical stresses in the Middle East, still-elevated core inflation, and the potential for stresses in China’s property sector to deepen. Global current account imbalances remained elevated in 2022 relative to pre-pandemic levels, as trade and tourism patterns remained disrupted and rising commodity prices tended to strengthen the current accounts of commodity exporting countries and weaken those of commodity importers. As these impulses wane, the IMF projects global imbalances to narrow in 2023 but highlights risks around this forecast, including additional shocks to commodity prices or the risk of a severe tightening of financial conditions. Among major U.S. trading partners, the very large surpluses of Germany, Ireland, Switzerland, Taiwan, the Netherlands, and Singapore have each remained significant as a share of GDP over the four quarters through June 2023. China’s surplus was higher in dollar terms at $389 billion (2.2% of GDP) over four quarters through June 2023, compared to $380 billion in the four quarters through June 2022 (2.1% GDP). Meanwhile, the U.S. current account deficit narrowed to 3.3% of GDP in the four quarters through June 2023, down from 4.0% of GDP in the four quarters through June 2022. Differing growth and inflation outlooks have led to a range of monetary policy actions across countries, and fundamentals including interest rate differentials, terms of trade shocks, and growth expectations have had large impacts on currencies. In 2022, the doll US Treasury Refrains From Designating Any Currency Manipulators - Reiterates Call For More China Transparency On Exchange Rate - Drops South Korea, Switzerland From Currency Watchlist

Global economic growth turned out stronger in 2022 than expected in the Fall. The IMF lifted its estimate of global growth during 2022 from 1.7% as of October 2022 to 2.0% in April 2023 (measured on a Q4/Q4 basis). Prices of commodities like food and energy have stabilized, supply chain pressures continued to ease, and China’s reopening should provide a boost to global growth. Nevertheless, Russia’s war against Ukraine continues to weigh on the outlook and has increased energy and food insecurity. Looking forward, the IMF projects global growth to increase in 2023, to 2.9% before increasing to 3.1% in 2024. The global economic outlook continues to face elevated uncertainty as Russia’s war enters its second year, core inflation remains high, and financial market stresses emerged. Global current account imbalances remained elevated in 2022 relative to pre-pandemic levels, as trade and tourism patterns remained disrupted. Rising commodity prices tended to strengthen the current accounts of commodity exporting countries and weaken those of commodity importers. Among major U.S. trading partners, the very large surpluses of Germany, Ireland, Switzerland, Taiwan, the Netherlands, and Singapore have each remained significant as a share of GDP over the four quarters through December 2022. China’s surplus was higher in dollar terms at $402 billion over four quarters through December 2022 (2.2% of GDP), roughly $49 billion higher than in the four quarters through December 2021. Meanwhile, the U.S. current account deficit rose modestly to 3.7% of GDP in the four quarters through December 2022, up from 3.6% of GDP in the four quarters through December 2021. Differing growth and inflation outlooks have led to a range of monetary policy actions across countries, and fundamentals including interest rate differentials, terms of trade shocks, and growth expectations have had large impacts on currencies. In 20 *US Keeps China on FX Watchlist, Not Designated as Manipulator *US Drops Japan From Currency Watchlist *US Concern on Switzerland FX Eases but It Remains on Watchlist *US Treasury Refrains From Designating Any Currency Manipulators US TREASURY: CHINA'S FAILURE TO PUBLISH IT'S FOREX INTERVENTION MAKE IT AN OUTLIER AMONG MAJOR ECONOMIES AND WARRANTS CLOSE MONITORING.