The US Department of the Treasury expanded the number of countries subject to scrutiny in a semi-annual report released on Tuesday, but again found that neither China nor any other trading partners was manipulating its currency.
The department urged China to avoid allowing the yuan to weaken persistently — which would give its products more competitive advantage.
Germany remained on the US “monitoring list” due to its large trade surplus, as did Japan and South Korea, indicating they “merit close attention to their currency practices.”
Taiwan was again left off the list.
The nation was labeled a currency manipulator in 1988 and placed on the list in April 2016, October 2016 and April 2017.
The latest report also removed India and Switzerland, because for two consecutive reports they had both met only one of three criteria necessary for inclusion on the monitoring list.
Despite a bitter trade spat with China focused on bringing down the US trade deficit, the Treasury held back from escalating the fight further.
It said the report concluded that “direct intervention by the People’s Bank of China in the last year has been limited.”
However, the US “continues to urge China to take the necessary steps to avoid a persistently weak currency,” it added.
The closely watched report broadened the field of its scrutiny for potential exchange-rate manipulation, as a weak currency makes US products less competitive and could undermine Washington’s efforts to cut a soaring global trade imbalance.
US Secretary of the Treasury Steven Mnuchin said the department “is expanding the number of US trading partners it reviews to make currency practices fairer and more transparent.”
With the newly expanded list, the department put nine trading partners on the monitoring list, including Ireland, Italy, Malaysia, Singapore and Vietnam.
Beginning with this report, the department is assessing all US trading partners with annual trade surpluses in goods of more than US$40 billion.
Based on trade last year, that standard covered 21 countries with nearly US$3.5 trillion in goods trade with the US, the report said.
China’s currency dropped 3.8 percent against the US dollar in the second half of last year, making it 8 percent weaker over the last year.
However, China only triggered one of the criteria used to determine whether a country merits close monitoring.
A senior Treasury official told reporters that China still merited inclusion “given the importance of China and their large, increasing surplus.”
The analysis could become even more critical after the US Department of Commerce last week announced it intends to change its rules to impose duties on countries that “act to undervalue their currency relative to the dollar, resulting in a subsidy to their exports.”
In the details of the proposed change, the commerce department said it would “defer to Treasury’s evaluation as to undervaluation” of a currency.
However, a senior Treasury department official said that would be “a distinct, different process” from the currency report.
The text is largely symbolic, as it only calls for consultations with countries deemed to be currency manipulators, but would gain more teeth if the commerce department can impose duties to retaliate.
Additional reporting by CNA
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS