The US Treasury Department re-added Japan to its foreign exchange monitoring list on Thursday, where its name had been absent since June 2023. It joins China, Vietnam, Taiwan, Malaysia, Singapore and Germany.
The listing came after Japan resumed its interventions in the currency market to stop the yen’s rapid decline against the US dollar in April and May.
Tokyo spent 9.8 trillion yen ($61.6 billion) between April and May this year to stem its depreciation, after the Japanese currency hit a 34-year low of 160.245 per US dollar on April 29.
The Treasury Department adds major US trading partners to the currency watch list when it seeks to assess whether the country has manipulated its foreign exchange rates to gain an unfair trade advantage.
Countries are automatically added if they meet two of the three criteria: a trade surplus with the US of at least $15 billion, a global account surplus above 3% of GDP, and persistent one-sided net foreign exchange purchases of at least 2% of GDP over 12 months.
In its biannual report published on Thursday, the Treasury Department said Japan, Germany, Taiwan and Vietnam all met the criteria for having a significant trade surplus with the US, as well as an outsized current account surplus.
The report cited Japan’s high trade surplus of $62.4 billion with the US last year, and its global current account surplus of 3.5% of GDP in 2023, up from 1.8% in 2022.
While the Treasury Department said Tokyo’s recent forex interventions to prop up the value of the yen were not a factor in deciding to place the country on the list, it noted that “intervention should be reserved only for very exceptional circumstances with appropriate prior consultations.”
The report covered economic data from the 20 largest US trading partners for the four quarters of 2023.
Although the US authorities have said Japan is “transparent with respect to foreign exchange operations,” the country’s Finance Minister Shunichi Suzuki said on Friday that Tokyo will maintain close communication with Washington with regards to currency policy after the re-listing.