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The One Condition Under Which The US Treasury Permits Korea To Manipulate Its Currency

Tyler Durden's picture


From the just released "Semiannual Report on International Economic and Exchange Rate Policies"

Korea’s current account surplus further increased to 6.1 percent of GDP in 2013 – the highest  since 1999 – compared to 4.2 percent in 2012. Korea is one of only a few surplus economies with a significantly larger external surplus now than before the crisis. Net exports accounted for over half of Korea’s growth in 2013, highlighting the economy’s continued dependence on external demand and the weakness of domestic demand. Although Korea does not publish data on its foreign exchange intervention, during the second half of 2013 the Korean authorities are believed to have intervened to limit the pace of won appreciation. Korea’s foreign exchange reserves rose from $315.6 billion at end-June 2013 to $335.6 billion at end-December and $341.0 billion at the end of February 2014. The Korean authorities also increased their net forward position by $4.9 billion to $50.5 billion over the second half of 2013. The magnitude of these changes is larger than can be reasonably expected from simple interest earnings on the existing stock of reserve assets or valuation changes. The Korean authorities should limit foreign exchange intervention to the exceptional circumstances of disorderly market conditions and increase the transparency of their interventions in foreign exchange.

On behalf of South Korea we would like to thank the US Treasury, whose debt issuance the Fed has montized for the past five years and kept the USD low - this permission is very generous of you.

On the other hand, China was not quite as lucky to get the permissive manipulation treatment:

Recent developments in the RMB exchange rate would raise particularly serious concerns if they presage renewed resistance to currency appreciation and a retreat from China’s announced policy of reducing intervention and allowing the exchange rate to reflect market forces. We will continue to monitor these issues closely going forward. In line with the practice of most other G-20 nations, China should disclose foreign exchange market intervention regularly to increase the credibility of its monetary policy framework and to promote exchange rate and financial market transparency.


China should refrain from intervention within the band and should allow market forces to permit the reference rate to adjust if market pressures push the exchange rate to the edge of the band.

Like, for example, buying up all 10 Year duration issued by its Treasury? One would almost be left with the impression that China is receiving less than fair (there's that word again) treatment by the US.

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Tue, 04/15/2014 - 18:33 | 4663111 surf0766
surf0766's picture

PEAK BULLSHIT !!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Tue, 04/15/2014 - 18:35 | 4663119 Say What Again
Say What Again's picture

When all of this central banksta shit begins to unwind, there will be NOWHERE to hide.

Tue, 04/15/2014 - 18:38 | 4663124 surf0766
surf0766's picture

I think it is unwinding now.  Are people really this stupid not to understand or do they not want to understand...

Peace !

Wed, 04/16/2014 - 00:12 | 4664051 prains
prains's picture

KUNG POW CHICKEN !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Wed, 04/16/2014 - 08:45 | 4664600 old naughty
old naughty's picture

com'on, what have they done?

Being finger-pointed and then boat sunk with a loss of 300?

Tue, 04/15/2014 - 18:36 | 4663121 Troll Magnet
Troll Magnet's picture

Tomorrow's Headline: US Tells Korea Not to Blow Up Its Own Buildings and Use It as a Ploy to Enslave Its People and Wage Wars.

Tue, 04/15/2014 - 18:35 | 4663113 DoChenRollingBearing
DoChenRollingBearing's picture

Korea can do whatever it wants.  If they want to keep their currency low, that's OK with us as Korean bearing importers into Peru.

Tue, 04/15/2014 - 18:43 | 4663116 q99x2
q99x2's picture

I want a printing press damn it.

Max Keiser has one. I want one.

Bitcoin Last Price: 511.5000

And climbing.

Tue, 04/15/2014 - 19:26 | 4663287 Citxmech
Citxmech's picture

Talk to BTC-E and see what it takes to get "q99x2Coin" listed.

btw - BTC was at $360.00 two days ago.  It's kind of hilarious to read the comments bar on the side of BTC-E.  Sound's like a bunch of 22 year olds who just discovered the concept of momentum trading.

Tue, 04/15/2014 - 18:37 | 4663122 yogibear
yogibear's picture

BRICS cause the US dollar to crash already.

The US Federal Reserve is touting it can control inflation and they desperately want it. Let the people of dump out of US dollars and kill the Petro-dollar.

Seems like the Fed is begging for hyperinflation.  The rest of the world should grant their wishes.

Tue, 04/15/2014 - 18:40 | 4663128 McMolotov
McMolotov's picture

This is why North Korea is best Korea.

Tue, 04/15/2014 - 18:49 | 4663157 chinoslims
chinoslims's picture

This sounds like the mafia granting operating license to a subsidiary. 

Tue, 04/15/2014 - 19:00 | 4663192 Bogdog
Bogdog's picture

"The Korean authorities should....increase their transparency" - that made me snork my coffee. HOLY FUCK, that's ballz!!!


Wed, 04/16/2014 - 07:03 | 4664380 tonyw
tonyw's picture

don't froget this is the mostest transparent regime administration

Tue, 04/15/2014 - 19:36 | 4663310 jonjon831983
jonjon831983's picture

"Gold: In search of a new standard"

"The London fix has been in place for almost a century but critics say the system needs reform"


Conveniently, offered free to view on FT.

Advertised with this synopsis:

"Is the gold market being rigged?

Unlike other commodities, gold is not traded on an exchange in London. Instead a price is fixed between five banks via conference call. The system has been criticised as being vulnerable to manipulation and is now under scrutiny from German financial regulators and US lawyers alike.

Image by Getty."

Tue, 04/15/2014 - 19:48 | 4663348 29.5 hours
29.5 hours's picture



Another nice report from Treasury and other dark places of stinking imperial arrogance. So Japan gets a complete pass on "currency manipulation" but Korea is not to engage in any of that stuff except when their house is on fire.

The alliance continues to fray.




Tue, 04/15/2014 - 20:40 | 4663538 Son of Captain Nemo
Son of Captain Nemo's picture

The Korean authorities should limit foreign exchange intervention to the exceptional circumstances of disorderly market conditions...

Except of course when the U.S. decides to do the very same thing?

Hey didn't Shiv'me Abe of Japan get a pep talk like this from Uncle Sam the end of last year?!!!

Tue, 04/15/2014 - 20:55 | 4663569 Wait What
Wait What's picture

this is why people around the world hate America. double standards and hypocracy at their expense, that is, only the favored few get to manipulate and intervene all they want. America has no friends, only creditors and protectorates. once they realize America has been playing them for years, even the latter will turn and walk away, leaving this country to drown in a cesspool of its own making. we should thank the political parasites who have been running the country for this state of affairs.

Tue, 04/15/2014 - 21:32 | 4663659 earleflorida
earleflorida's picture

samsung, hyundai/kia, and merchant/ commerce shipping manufacturer [lng/natgas], SHIC [SANY Heavy Equipment Manufacturing Plants... just to mention a few no-no's that aapl, msft, gm, f, cat, and of coarse china's dislike of the 38th parallel-- their faux buffer`end-zone?

Wed, 04/16/2014 - 03:23 | 4664217 laomei
laomei's picture

Bad China, BAD! How dare you attempt to defend your own currency or have policies which in any way shape or form conflict with ours!

Do NOT follow this link or you will be banned from the site!