By Lee Hyo-sik
Staff Reporter

Some United States lawmakers and industries are moving to designate South Korea as a currency manipulating country amid an ongoing currency dispute with China, the Korea International Trade Association (KITA) said in a report Monday.

But the government said that the move has been initiated by certain U.S. business associations for self-interests, not by the U.S. government, as Korea has adopted a free floating foreign exchange system since the 1997-1998 Asian financial crisis.

``Some U.S. business organizations, including the American Automobile Manufacturers Association, may have been lobbying the Congress and the Administration to file a complaint regarding our foreign exchange policy,’’ Choi Hee-nam, director of foreign exchange division at the Ministry of Finance and Economy (MOFE), said.

Choi added that the claim that the Korean government has heavily intervened in the foreign exchange market to keep the value of the won low does not make sense, as the won has strengthened significantly against other major currencies, including the greenback, over the past two years.

``The government believes that the U.S. administration sees the issue differently from certain business organizations, demonstrated by the report submitted by the Treasury Department last month to the Congress that Korea does not manipulate the value of its currency to boost exports,’’ he said.

But Choi added that the MOFE will closely cooperate with other ministries and keep monitoring any new development to prevent it from becoming a full-scale trade dispute with the U.S.

The U.S. move comes after the U.S. government asked China last month to revalue its currency within the next six months in an attempt to cut its chronic trade deficit with the world’s fastest growing economy.

The yuan is currently pegged at 8.36 for a dollar, which many economists say is significantly undervalued, considering China’s huge trade surplus and inbound foreign investment.

The KITA report said that some U.S. lawmakers have raised the issues of Korea’s surging foreign exchange reserves as evidence that the Korean government has been manipulating the value of the won in a bid to maintain the price competitiveness of its exporters in the U.S. market.

The U.S. automobile industry, hit hard by rising imports of Korean automobiles, has also been active in urging the administration to warn the Korean government to stop buying the dollar in the currency market to keep the won’s value low, the report said.

``U.S. automakers, including General Motors and Ford, have taken issue with Korea’s foreign exchange policy as they have been suffering from increasing competition from Korean automobile manufacturers,’’ a KITA official said.

``We do not expect the move by some U.S. lawmakers and automakers to prompt the U.S. administration to take any dramatic measure against the U.S.-bound Korean products.’’

An economist at Korea Center for International Finance predicted that the U.S. government will not designate South Korea as a currency manipulating country due to the latter’s free floating currency market and policy stance to intervene in the foreign exchange market only for smoothing out operations as do many other countries.