US Treasury says semi-annual currency report concluded no major US trading partners manipulated currency to gain unfair trade advantage during four quarters through June 2025

• Lack of transparency will not preclude the Treasury from designating China if evidence suggests it is intervening through formal or informal channels to resist yuan appreciation in the future.
• Keeps China, Japan, South Korea, Singapore, Taiwan, Vietnam, Germany, Ireland and Switzerland on currency monitoring list.
• China is not labelled a currency manipulator amid yuan depreciation pressure but stands out among trading Partners for lack of transparency on exchange rate practices and policies.
• Thailand added to the monitoring list of trading Partners whose currency practices merit close attention due to its growing current account surplus and trade surplus with the US.
• No major trading Partners met all three criteria for enhanced analysis during the review period.
• Official says new criteria not aimed at any specific Country on monitoring list but will aid future analysis during a period of relative Dollar depreciation.
• Monitoring Central banks' use of foreign exchange swaps and net forward positions to offset spot interventions and minimise impact on domestic monetary conditions.
• Now monitoring more broadly whether countries that smooth exchange rate movements do so to resist depreciation pressures.
• Monitoring trading Partners' use of capital controls, macroprudential measures, and government investment vehicles to influence foreign exchange markets.

The US Treasury's latest currency report maintains that no major trading partners, including China, are currently manipulating their currencies for trade advantage, which should ease some tensions in US-China relations. However, the ongoing scrutiny of China's exchange rate practices highlights potential future risks, especially against a backdrop of yuan depreciation. Traders should be mindful of how this impacts dollar dynamics and the broader sentiment in the fixed income and forex markets.