The US Treasury FX report did not designate any “currency manipulators,” and the overall tone is more constructive

Overview

This report interprets the US Treasury’s semiannual Report to Congress on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States. The core conclusion is that this report did not designate any major US trading partner as a “currency manipulator,” and no new members were added to the monitoring list, which still includes China, Japan, Korea, Taiwan, Singapore, Vietnam, Germany, Ireland, Thailand, and Switzerland. Goldman Sachs believes the report’s overall tone is more constructive than before, especially in its marginally softer language on China and its recognition of the appreciation of major trading partners’ currencies and the limited accumulation of foreign exchange reserves.

Core views

Goldman Sachs’ core views include: first, the US Treasury neither expanded the monitoring list nor designated any currency manipulators this time, reducing the report’s direct policy impact. Second, Thailand, Singapore, and Switzerland met only one criterion, and if they still meet fewer than two in the next reporting period, they may be removed from the monitoring list. Third, although the Treasury had previously broadened its analytical scope to consider factors such as government investment vehicles, FX reserve coverage, capital controls, monetary policy, and asymmetric intervention, these additional dimensions have not yet had a substantive effect on the conclusions. Fourth, the July report’s description of China was milder than in January, but it still retained concerns about transparency, non-market support, and external imbalances.

Analysis framework

The report mainly relies on policy text comparison and a breakdown of the standards framework, analyzing item by item how the US Treasury evaluates trading partners’ foreign exchange policies under the 2015 Act and the 1988 Act, and comparing changes between the July and January reports in wording, application of standards, the monitoring list, and country cases.

Methodology notes

• Policy evaluation frameworkUS Treasury 2015 Act three criteria

  significant bilateral trade surplus with the US, material current account surplus, persistent one-sided foreign exchange intervention

  The US Treasury uses three criteria to assess whether major trading partners should be placed on the monitoring list, and the thresholds involve a degree of discretion; the current administration has maintained the thresholds set by the previous administration.

• Policy evaluation frameworkComprehensive judgment under the 1988 US Act

  whether exchange rates are manipulated to gain an unfair competitive advantage in international trade or to prevent effective balance of payments adjustment

  The 1988 Act requires the Treasury to judge more broadly whether an economy manipulates its exchange rate, so this report also considers factors such as government investment vehicles, reserve coverage, capital controls, monetary policy, and asymmetric intervention.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Renminbi and China-related FX assets

  affected by the US Treasury’s wording on China’s exchange rate policy

  Strengths

  The report acknowledged that the renminbi appreciated gradually and in a managed manner after trade tensions eased, and the tone was milder than before.

  Weaknesses

  The Treasury still emphasized China’s lack of transparency and large-scale non-market support for domestic manufacturing.

  Comparison

  Compared with the January report, the July report removed some more hawkish wording and eliminated the separate section on Chinese government investment vehicles.

  Risks

  If future renminbi appreciation proves insufficient, transparency issues worsen, or external imbalances expand, the US Treasury may still adopt tougher wording.

• Japanese yen and Korean won

  affected by scrutiny of Japan’s and Korea’s FX policies

  Strengths

  The report did not treat the recent practices of Japan or Korea as problematic, especially given the substantial depreciation pressure faced by both countries.

  Weaknesses

  Japan and Korea still meet two monitoring criteria and therefore remain on the monitoring list.

  Comparison

  The Treasury continues to discuss the practices of entities such as Japan’s GPIF, Japan Post Bank, and Korea’s NPS, but did not treat them as major negative factors.

  Risks

  If more proactive or larger-scale asymmetric intervention occurs in the future, especially under appreciation pressure, scrutiny may increase.

• Thai baht, Singapore dollar, Swiss franc

  related to conditions for exiting the monitoring list

  Strengths

  Thailand, Singapore, and Switzerland met only one criterion this time, creating the possibility of being removed from the monitoring list in the next period.

  Weaknesses

  They are still temporarily retained on the monitoring list and need to wait for confirmation in the next reporting period.

  Comparison

  Compared with economies meeting two criteria, these three face lower monitoring pressure.

  Risks

  If they again meet two or more criteria in the next reporting period, expectations for removal from the monitoring list may be disappointed.

• US dollar and broad G10 FX

  the US dollar’s depreciation in 2025 improved the report’s tone

  Strengths

  A weaker US dollar prompted the Treasury to acknowledge the appreciation of multiple currencies and the limited accumulation of foreign exchange reserves.

  Weaknesses

  The Treasury still focuses on global and bilateral imbalances, and a reversal in the dollar’s trend could change the policy wording.

  Comparison

  Compared with the January report, the July report placed less emphasis on issues such as overly tight fiscal policy or suppressed consumption in specific countries.

  Risks

  If global imbalances widen or FX intervention rises again, future reports may shift back to a tougher tone.

Key data

• Currency manipulator designation0This semiannual report did not designate any major US trading partner as a “currency manipulator.”
• Monitoring list membersChina, Japan, Korea, Taiwan, Singapore, Vietnam, Germany, Ireland, Thailand, SwitzerlandThis report added no new members to the monitoring list.
• Economies meeting two criteriaChina, Japan, Korea, Taiwan, Vietnam, Germany, IrelandThese economies met the two criteria of a significant bilateral surplus with the US and a material current account surplus.
• Economies meeting only one criterionThailand, Singapore, SwitzerlandIf they meet fewer than two criteria in the next reporting period, they will be removed from the monitoring list.
• Change in wording on ChinamilderThe report acknowledged that after trade tensions eased, the renminbi appreciated gradually and in a managed manner against the US dollar through the end of 2025, and it removed some previous wording about suppressing imports and overreliance on export growth.

Impact & implications

The report’s direct impact on the FX market is relatively mild. By not designating any currency manipulators and not adding new members to the monitoring list, it reduces the immediate risk of friction surrounding trading partners’ exchange rate policies; at the same time, its more constructive wording on China and other trading partners may help ease market concerns about an escalation in US exchange rate policy. However, the Treasury still emphasizes large and persistent global and bilateral imbalances, meaning that these countries’ current accounts, trade surpluses with the US, FX intervention, and policy transparency will remain key focuses of future reports.

Risks

• The US Treasury remains focused on “large and persistent” global and bilateral imbalances, and future reports may again intensify policy pressure.
• China’s lack of transparency and non-market support continue to be singled out; although the wording has softened, policy risk has not been fully eliminated.
• If some economies meet more monitoring criteria in the next reporting period, expectations for their exit from the monitoring list may be disappointed.
• Broader indicators such as government investment vehicles, FX reserve coverage, capital controls, and asymmetric intervention may still become substantive judgment factors in the future.

What to watch

• Whether Thailand, Singapore, and Switzerland are removed from the monitoring list in the next US Treasury FX report.
• Whether language related to China’s renminbi exchange rate policy, FX transparency, and support for manufacturing continues to soften.
• FX intervention by Japan and Korea and the activities of government-related investment vehicles under depreciation or appreciation pressure.
• The US dollar’s trend, the extent of appreciation in major trading partners’ currencies, and the accumulation of foreign exchange reserves.
• Whether the US Treasury restores or strengthens appendices or similar disclosure requirements on foreign exchange policy transparency.