The United States on Friday said China's currency remains "significantly undervalued" and warned Japan and South Korea against weakening their currencies to gain a trade advantage.
In a twice-yearly finding to Congress on exchange-rate policies, the US Treasury took aim at the country's big Asian trade partners ahead of a series of high-level international meetings in Washington next week.
"Among major emerging market economies, many, especially in Asia, have more tightly managed exchange rates, with varying degrees of active management," the Treasury said.
"The report highlights the need for greater exchange rate flexibility and transparency in these economies, most notably in China."
Taking surprise aim at Tokyo, the Treasury raised questions about Japan's effort to reflate its economy, a move that has sent the yen sharply tumbling to its lowest level since May 2009.
The yen has moved from 77 to the dollar to nearly 100 to the dollar since October.
The Treasury said that Japan's macroeconomic stimulus would be supportive in the short term "but cannot be a substitute for structural reform that raises productivity and trend growth."
It urged Tokyo "to remain oriented towards meeting respective domestic objectives using domestic instruments and to refrain from competitive devaluation and targeting its exchange rate for competitive purposes."
As for China, once again, in the face of congressional critics of China's huge bilateral trade advantage, the Treasury declined to officially brand Beijing a currency manipulator, a move that could spark US trade sanctions.
"China has taken a series of steps to liberalize controls on capital movements, as part of a broader plan to move to a more flexible exchange rate regime," the Treasury said.
The Treasury said that as of early April 2013, the yuan, or renminbi (RMB), has appreciated 10.0 percent against the US dollar since June 2010, when China moved off its exchange rate peg.
When inflation is taken into account, the yuan has appreciated 16.2 percent from June 2010 through February 2013, it said.
For that reason, the Treasury said it had concluded that the standard for determining the exchange rate was manipulated to gain an unfair competitive advantage "has not been met with respect to China."
But it said China's yuan is still underpriced.
"The available evidence suggests the RMB remains significantly undervalued, intervention appears to have resumed, and further appreciation of the RMB against the dollar is warranted."
On April 1, the yuan had appreciated 1.9 percent from a year ago, according to market data.
The Treasury also assailed Seoul for intervening in currency markets to limit the strength of the won.
The won appreciated by eight percent against the dollar in 2012, the most among the G20.
South Korea has done so with the stated goal of smoothing volatility in the won, it said.
"We will continue to press the Korean authorities to limit their foreign exchange interventions to the exceptional circumstances of disorderly market conditions," the Treasury said.
"We will also continue to press Korean authorities to ensure macroprudential measures should be clearly directed to reducing financial sector risks... rather than to limiting capital inflows or reducing upward pressure on the exchange rate."
The Treasury recalled that its Group of 20 partners, at a February meeting dominated by the issue of currency wars, had agreed to refrain from competitive devaluation and exchange-rate targeting trade advantage.
The critical report suggested currency wars would be high on the agenda of the G20 meeting next Friday amid the annual spring meetings of the International Monetary Fund and World Bank in Washington.