At one extreme, Hong Kong has maintained a "linked" exchange rate with the U.S. dollar since 1983, under which the Hong Kong Monetary Authority (HKMA) is required to intervene to keep the exchange rate between 7.75 and 7.85 Hong Kong dollars (HKD) to the U.S. dollar (USD). At the other extreme, Japan, the Philippines, and South Korea have reportedly allowed their currencies to float freely in foreign exchange (forex) markets over the last few years—an exchange rate arrangement often referred to as a "free float." A nation that adopts a "managed float" allows the value of its domestic currency to fluctuate in international forex markets until certain designated economic indicators reach critical levels. One special form of a managed float is a "crawling peg," in which the nation allows its currency gradually to appreciate or depreciate in value against one or more other currencies over time. Since then, the renminbi has weakened against the dollar. Japan's yen has undergone major shifts in value relative to the U.S. dollar over the past 10 years, ranging from a low of 125.35 yen to the U.S. dollar in June 2015 to a high of 76.14 yen to the U.S. dollar in February 2012 (see Figure 1 ). The last confirmed time Japan intervened in foreign exchange markets was in 2011. Trends in selected Southeast Asian exchange rates over the last 10 years have led some analysts to surmise that a "renminbi bloc" emerged in 2007 and early 2008, and reemerged between 2011 and 2013 (see Figure 2 ). In addition to the apparent similar movements in the value of their currencies relative to China's renminbi, there is other anecdotal evidence consistent with the existence of a "renminbi bloc" in Southeast Asia, at least for a period of time. According to International Monetary Fund trade data, China has emerged as the largest trading partner for many Asian nations, including Indonesia, Malaysia, the Philippines, Singapore, and Thailand. China has also been actively promoting the use of the renminbi to settle trade payments, as well as to arrange currency swap agreements. The Trade Facilitation and Trade Enforcement Act of 2015

For nearly 30 years, the Department of the Treasury has been required to provide biannual reports to Congress on the exchange rate policies of foreign countries. The TFTEA also requires the report contain
an enhanced analysis of macroeconomic and exchange rate policies for each country that is a major trading partner of the United States that has—
(I) a significant bilateral trade surplus with the United States;
(II) a material current account surplus; and 
(III) engaged in persistent one-sided intervention in the foreign exchange market. According to its analysis, "Treasury has found in this Report that no major trading partner met all three criteria for the current reporting period [August-December 2016]." The report did, however, place six major trading partners—China, Germany, Japan, South Korea, Switzerland, and Taiwan—on a "Monitoring List" of "major trading partners that merit close attention to their currency practices." Four of the six major trading partners are in East Asia. Exchange Rate Policies and Issues for Congress

While U.S. policy has generally supported the adoption of "free float" exchange rate policies, many East Asian governments consider a "managed float" exchange rate policy more conducive to their overall economic goals and objectives. The Currency Reform for Fair Trade Act ( H.R. chapter 4) to permit the imposition of countervailing duties on the imports of countries whose currency is determined to be "fundamentally undervalued." The act also stipulates that a currency is to be determined undervalued if
1.
According to the International Monetary Fund (IMF), monetary authorities in East Asia (including Southeast Asia) have adopted a variety of foreign exchange rate policies, varying from Hong Kong's currency board system which links the Hong Kong dollar to the U.S. dollar, to the "independently floating" exchange rates of Japan, the Philippines, and South Korea. Most Asian monetary authorities have adopted "managed floats" that allow their currency to fluctuate within a limited range over time as part of a larger economic policy. Regardless of their exchange rate policies, monetary authorities on occasion may intervene in foreign exchange (forex) markets in an effort to dampen destabilizing fluctuations in the value of their currencies.
Legislation has been introduced during past Congresses designed to pressure nations seen as "currency manipulators" to allow their currencies to appreciate against the U.S. dollar. The Trade Facilitation and Trade Enforcement Act of 2015 (P.L. 114-125) requires the Secretary of the Treasury to provide Congress every 180 days with "enhanced analysis of macroeconomic and exchange rate policies" for each major trading partner that has a significant trade surplus with the United States, a current account surplus, and "engaged in persistent one-sided intervention in the foreign exchange market." In its latest report, Treasury determined that "no major trading partner met all three criteria for the current reporting period." Treasury did place six major trading partners—China, Germany, Japan, South Korea, Switzerland, and Taiwan—on its "Monitoring List." Four of those six major trading partners are in East Asia. In the 115th Congress, the Currency Reform for Fair Trade Act (H.R. 2039) would allow the imposition of countervailing duties on goods imported from a foreign country whose currency is determined to be "fundamentally undervalued" in accordance with the provisions of the act.
Most East Asian monetary authorities consider a "managed float" exchange rate policy conducive to their economic goals and objectives. A "managed float" can reduce exchange rate risks, which can stimulate international trade, foster domestic economic growth, and lower inflationary pressures. It can also lead to serious macroeconomic imbalances if the currency is, or becomes, severely overvalued or undervalued. A managed float usually means that the nation has to impose restrictions on the flow of financial capital or lose some autonomy in its monetary policy.
Over the last 10 years, the governments of East Asia have differed in their response to the fluctuations in the value of the U.S. dollar. China, for example, allowed its currency, the renminbi, gradually to appreciate against the U.S. dollar between 2007 and 2015, and has been actively intervening in foreign exchange (forex) markets since then to prevent the depreciation of its currency. Indonesia, however, has allowed its currency, the rupiah, to depreciate in value relative to the U.S. dollar over the last decade.
Between 2011 and 2013, some Southeast Asia nations—such as Malaysia, the Philippines, Singapore, and Thailand—appeared to have adopted exchange rates regimes to keep their currencies relatively stable with respect to China's renminbi. This supposed "renminbi bloc" may have emerged because those nations' economic and trade ties were increasingly with China. In addition, China was actively promoting the use of its currency for trade settlements, particularly in Asia. Exchange rate patterns for the last four years, however, have led some analysts to suggest the "renminbi bloc" may have weakened.
This report will be updated as events warrant.