Singapore, Vietnam remain on US Treasury’s currency watch list; Thailand added

[SINGAPORE] The Republic remained among 10 economies on the US Treasury’s currency monitoring list, with Thailand being the newest addition.

Other economies retained on the watch list are China, Japan, South Korea, Taiwan, Vietnam, Germany, Ireland and Switzerland.

The report released by the US Treasury on Thursday (Jan 29) classified Singapore as an outlier as it is the only nation on the list running a bilateral trade deficit with the US, rather than a surplus.

Given that Singapore does not meet the criteria to trigger enhanced analysis by the US, Chang Wei Liang, foreign exchange (FX) and credit strategist at DBS, told The Business Times that he does not expect the country’s retention on the list to affect future policy decisions. 

He added that the Monetary Authority of Singapore (MAS) sets policy based on its assessment of the domestic economy. 

“Additionally, Singapore has also increased transparency in recent years by publishing its FX intervention data on a semi-annual basis, which should assuage any doubts over its currency policy,” he said. 

Under the 2015 Trade Facilitation and Trade Enforcement Act, the US Treasury evaluates partners based on three criteria: a significant bilateral trade surplus, a material account surplus and persistent one-sided foreign exchange intervention. 

The US Treasury noted that during the four quarters until June 2025, no major trading partners met all three criteria and so none of these economies required enhanced analysis.

Singapore met two: “engaging in persistent, one-sided foreign exchange intervention” and having a material account surplus, the report said. 

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Chang said: “Singapore’s inclusion on the US Treasury FX monitoring list reflects a mechanical outcome of meeting some of the Treasury’s criteria, rather than a policy judgment.”

The Republic’s current account surplus averaged around 18 per cent of gross domestic product over the past 15 years, driven by services imports, said the report.

The US Treasury also estimated that MAS made net foreign exchange purchases of US$18 billion. This is equivalent to around 3.1 per cent of GDP, which occurred in eight of 12 months, exceeding the US threshold for persistent activity. 

Singapore’s “excessively tight” fiscal policy was highlighted by the report as a factor underpinning its large surpluses.

The US Treasury urged Singapore, as well as Taiwan, Vietnam and Switzerland to consider deregulation and calibrated fiscal policy measures to support global and domestic growth.

The US added Singapore to the watch list in 2019, when the city-state made estimated net foreign exchange purchases of at least US$17 billion in 2018, equivalent to 4.6 per cent of GDP.

MAS responded at the time that it does not use currency manipulation to gain an export advantage, stressing that Singapore’s monetary policy framework, which is centred on the exchange rate, has always been aimed at ensuring medium-term price stability.

The central bank manages the Singapore dollar nominal effective exchange rate within a policy band, just as its peers conduct monetary policy through interest rates.

“MAS does not and cannot use the exchange rate to gain an export advantage or achieve a current account surplus,” it said.