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(Bloomberg) -- President Donald Trump’s intensifying trade crusade is putting a fresh spotlight on an upcoming U.S. assessment of foreign-exchange policies.

While Trump threatened on the campaign trail to brand China a manipulator of its exchange rate once in the White House, the U.S. Treasury’s semiannual currency reports failed to name any such violators in 2017.

But the next release, expected this month, comes in the wake of a series of tariff announcements by the administration, as Trump seeks to deliver on promises of action to cut a widening trade deficit. A more bellicose report could put appreciation pressure on those currencies singled out; China, Japan, South Korea, Germany and Switzerland were on the monitoring list in October, with India also being closely watched.

“This report takes on added significance given the lurch towards protectionism and tariffs,” said Dwyfor Evans, the Hong Kong-based head of Asia-Pacific macro strategy at State Street Global Markets. “It will be interesting to see whether the U.S. Treasury sees fit to single out Thailand or whether the trade focus is squarely a Chinese issue, as seems to be the case at this time.”

Taiwan was taken off the monitoring list in October, while the U.S. and South Korea are working on a currency agreement to “prohibit competitive devaluation and exchange-rate manipulation,” the U.S. Trade Representative’s office said in a statement last month. South Korea and India are among a handful of nations that cut their trade surpluses with the U.S. last year.

Malaysia and Thailand have been identified as countries at risk of being added to the monitoring list, although gains in their currencies could leave them less exposed. The Bank of Thailand’s foreign-exchange operations “are never intended for Thailand to gain unfair competitive advantage over trading partners,” Assistant Governor Chantavarn Sucharitakul said in a written response to questions.

Here’s what analysts are watching for in the report, which has sometimes come with delayed release dates from the Treasury.

Capital Economics Ltd. (Gareth Leather, senior Asia economist, and Krystal Tan, Asia economist)

  • “The upcoming U.S. Treasury report will be the next test of Trump’s intentions,” Leather and Tan write in note. “The decision is likely to be as much a political as an economic one, and is not a foregone conclusion”
  • “The act of officially labeling China or anywhere else in Asia a currency manipulator would represent a significant ratcheting up of tensions”
  • “Taiwan, Korea, Hong Kong, Singapore and Malaysia meet two of the three criteria, but Thailand is the only country in the region that meets all three.” (The criteria relate to the size of trade surplus with the U.S., magnitude of current-account surplus relative to the economy, and degree of net purchases of foreign currencies)

Mitsubishi UFJ Kokusai Asset Management Co. (Takahide Irimura, head of economic research)

  • “If they use stronger -- or stricter-than-usual -- language in the report, that may give the impression that the U.S. prefers a weaker dollar, weighing on the dollar and boosting Asian currencies”
  • “Thailand seems to have intervened quite aggressively, thinking that the U.S. may not care so much about a small country. So, if they are added to the watchlist, there would be speculation it would be harder for them to intervene, and that would add appreciation pressure to the baht”
  • India may not be mentioned, as there’s been less need for India to intervene thanks to more balanced capital flows

Morgan Stanley (analysts Chun Him Cheung and Jesper Rooth)

  • “Malaysia and Thailand could be added to the monitoring list due to increased sensitivities around trade and foreign-exchange policies,” while Taiwan and India are also worth watching, the analysts write in note
  • Recommends being long Thai baht against the Australian dollar as Thailand may be “seeking accommodation rather than conflict” with the U.S.

Australia & New Zealand Banking Group (Khoon Goh, head of Asian research)

  • “We see a possibility India could be added to the monitoring list as it now meets two of the three criteria,” he says in note; inclusion might prompt the central bank to ease back on their intervention over this year
  • “Thailand technically meets all the three criteria” but it’s not defined as a major trading partner; it could be added to the monitoring list if the net is cast wider, and, in this event, Malaysia could also rate a mention

TD Securities (Mitul Kotecha, senior emerging markets strategist)

  • “Thailand, South Korea and Japan all breach two of the Treasury’s criteria and may be at risk of facing a rebuke by the U.S. administration,” Kotecha writes in note
  • “Intense U.S. pressure" implies "a less-interventionist stance by Asia and further upward pressure on Asian currencies”

CIBC (Jeremy Stretch, head of G-10 currency strategy)

  • “I would not expect the U.S. to gain much mileage in terms of specifically naming Germany,” given the euro has many component parts
  • The scale of the trade imbalance with Switzerland is “relatively modest,” and this “begs the question why flag the issue and risk an even wider trade spat”

State Street Global Markets (Evans)

  • “Nervousness around the report looks low at this point, but that in itself could be cause for a reaction if the report is more draconian on trade measures”

(Adds comments from ANZ in 11th paragraph.)

--With assistance from Anooja Debnath and Suttinee Yuvejwattana

To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net, Yumi Teso in Bangkok at yteso1@bloomberg.net.

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Andrew Janes

©2018 Bloomberg L.P.

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