The central bank yesterday pledged to continue “enhanced engagement” with the US after Washington on Friday placed Taipei on a list of countries being monitored for currency manipulation.
The bank said it has conducted several rounds of talks with US authorities on bilateral trade and currency since April last year, and clearly expressed its stance on the issues.
Citing the US Department of the Treasury’s latest semi-annual currency report covering last year, the bank said Washington agreed that the “productive discussions have helped develop a common understanding of the policy issues related to the Treasury’s concerns about Taiwan’s currency practices.”
Photo: CNA
“Over the next year, the central bank will continue its enhanced engagement with the US on currency issues,” it said, but did not comment on Taiwan’s performance regarding specific thresholds cited in the report.
The report placed Taiwan and Vietnam on a list of countries being monitored for currency manipulation.
The three thresholds the US uses to determine currency manipulation are: a bilateral goods and service trade surplus of at least US$15 billion, a current account surplus equivalent to 3 percent of GDP, and persistent, one-sided foreign-exchange interventions amounting to at least 2 percent of GDP.
According to the report, Taiwan’s bilateral trade surplus with the US and current account surplus were above the manipulation thresholds over the reporting period of the four quarters through December last year.
Taiwan recorded a US$40 billion bilateral goods trade surplus with the US last year, up from US$28 billion in 2020, and had a current account surplus of US$115 billion (14.8 percent of GDP), the report said.
Taiwan was not cited for excessive foreign-exchange interventions last year, when the New Taiwan dollar appreciated for a third straight year against the US dollar, by 2.95 percent.
Analysts said that the central bank intervened during most foreign-exchange trading sessions last year to limit the NT dollar’s gains, but the bank never admitted to it, saying only that it had a responsibility to combat volatility and maintain market stability.
This year, as the NT dollar has weakened against the greenback because of US Federal Reserve rate hikes to fight inflation, Taiwan’s central bank has stepped in to slow down the local currency’s depreciation, especially in March and April.
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