Washington, June 16 (CNA) In its semiannual report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States, the U.S. Treasury Department has maintained Taiwan on its watch list of currency manipulators.
The report, submitted to the U.S. Congress on Friday, evaluated and analyzed the policies of significant U.S. trading partners, which represented approximately 80 percent of U.S. foreign trade in goods and services throughout the four quarters until December 2022.
Taiwan, China, South Korea, Germany, Malaysia, Singapore, and Switzerland have also been included in the currency manipulation watch list, according to the U.S. Treasury. None of the major trading partners of the United States were designated as currency manipulators.
The U.S. Treasury report employs three criteria to determine the nations designated as currency manipulators. These criteria include: having a substantial bilateral trade surplus with the U.S., possessing a significant current account surplus, and engaging in persistent one-sided intervention in the foreign exchange market.
If an economy meets any one of these criteria in two consecutive U.S. currency reports, it is removed from the monitoring list.
The Central Bank of the Republic of China (Taiwan) stated on Saturday in Taipei that although Taiwan remains on Washington’s monitoring list for currency manipulation, both sides maintain open communication channels.
The central bank explained that Taiwan’s continued presence on the watch list is due to its surplus of US$51.0 billion in merchandise and services and a current account surplus accounting for 13.3 percent of its gross domestic product (GDP) during the four quarters ending in 2022.
However, the central bank reported a net sell-off of U.S. dollar reserves amounting to US$13 billion, equivalent to approximately 1.7 percent of Taiwan’s GDP. Additionally, the central bank’s net purchase of U.S. dollars fell short of eight months, failing to meet the third criterion of persistent one-sided intervention in the foreign exchange market.
The central bank assured it would maintain ongoing interaction with the U.S. Treasury through established communication channels.
Wu Meng-tao, an economist at the Taiwan Institute of Economic Research (TIER), expressed that Taiwan need not worry about its bilateral ties with the U.S. simply because it was included on the currency manipulation monitoring list once again.
Considering the recent agreement between Taipei and Washington under their “21st-century” trade initiative, signed on June 1, which addressed customs and border procedures, regulatory practices, and small businesses to facilitate trade and investment, Wu stated that the U.S. Treasury’s decision to place Taiwan on the currency manipulation watch list is not anticipated to affect bilateral trade relations.
After the signing, both parties indicated their intention to commence negotiations on more complex issues such as agriculture, digital trade, labor, environmental and non-market policies and practices, state-owned enterprises, and standards.
However, Wu cautioned that although the U.S. Federal Reserve maintained its key interest rates during the latest policy meeting that concluded on Wednesday, the Fed’s June “dot plot,” which provides insight into its monetary policy outlook, suggested the possibility of further interest rate hikes before year-end. He explained that such hikes could bolster the value of the U.S. dollar and impact capital flows, potentially causing turbulence in global financial markets that may necessitate intervention from the central bank.
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