The US Treasury Department has released its watchlist of countries which are to be monitored for their foreign exchange practices. The list includes China, Germany, Japan, South Korea and Taiwan. According to the modified semi-annual report released on Friday, the Treasury Department will observe these countries to determine whether their foreign exchange policies offer them undue trade advantage over the U.S.

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The US Treasury Department used three criteria to decide whether any trading partner is unfair. These criteria include whether the country has a trade surplus with the US above $20 billion, whether it has a current account surplus more than 3 percent of its gross domestic product and has repeatedly depreciated its currency by purchasing foreign assets equal to two percent of output over the year.

The five countries on the list were reportedly found guilty of at least two of the three abovementioned criteria. China entered the list for its trade and current account surplus. Japan, Germany, and South Korea also met the same criteria. However, Taiwan ran foul due to its current account surplus and repeated intervention to depreciate its currency.

The US Treasury Department had been watching nations for potential currency manipulation threat. No major trading partner was found guilty in the latest report.

The latest report released by the US Treasury Department said that the Chinese currency "should continue to experience real appreciation over the medium term." In its earlier report, the department had found Yuan to be "below its appropriate medium-term valuation."

The department also advised the Taiwanese government to limit its currency interventions to the "exceptional circumstances of disorderly market conditions, as well as increase the transparency of reserve holdings and foreign exchange market intervention."

Tagschina, United States of America, South Korea, Japan, Taiwan, Germany, treasury department