The US Department of the Treasury on Wednesday added Taiwan to a list of countries being monitored for currency manipulation, the first time the nation has made the list since 2017.
The department issued its semiannual report to the US Congress on the policies of the US’ top 20 trading partners, which said that Vietnam and Switzerland had met the criteria for being labeled currency manipulators.
The manipulator designation has no specific or immediate consequence, beyond short-term market impacts, but US law requires the government to engage with the listed nations to address the perceived exchange-rate imbalance.
Photo: Tyrone Siu, Reuters
Penalties, including exclusion from US government contracts, could be applied after a year if the label is not removed.
Taiwan made it to the list of nations being monitored, along with India and Thailand, joining China, Japan, Singapore, South Korea, Germany, Italy and Malaysia, which were named in previous reports.
The department’s report, Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States, states that a nation can be identified as a currency manipulator if it has a bilateral trade surplus with the US of at least US$20 billion, a current account surplus in excess of 2 percent of its GDP, and has engaged in persistent, one-sided intervention in the foreign exchange market. Taiwan met two of these criteria, it said.
First, Taiwan’s “persistently large current account surplus” — meaning that the value of its exports exceeds the value of its imports — reached 10.9 percent of GDP over the four quarters through June, the report said.
Taiwan’s bilateral trade surplus with the US expanded sharply during this period, rising to US$25 billion from US$18 billion the year before, the report said.
The report said that Taiwan had publicly disclosed its foreign exchange intervention in March, and encouraged it to “allow the New Taiwan dollar to appreciate to help reduce its large and durable external surpluses.”
“The Treasury welcomes Taiwan’s recent steps toward transparency and looks forward to continued efforts in this area,” it added.
The department usually publishes the assessment report in April and October, but had delayed its April report until Wednesday because of the COVID-19 pandemic.
Economies on the list must remain there for at least two consecutive reports to help ensure that any improvement “is durable and is not due to temporary factors.”
The last time Taiwan was on the monitoring list was from April 2016 to April 2017, while it was cited as a currency manipulator in 1988 and in 1992.
Additional reporting by Bloomberg
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