Taiwan urged the US to briefly relax its currency manipulation surveillance of trading partners during the ongoing Covid pandemic.
While the world battles the coronavirus, the US Treasury should suspend its three conditions for designating major trading partners as currency manipulators, Taiwan’s central bank said in a statement on its website Sunday in response to the latest US foreign-exchange policy survey.
The United States refrained from naming any economy a currency manipulator in the Biden administration’s first study, despite the fact that Taiwan, Switzerland, and Vietnam all met the threshold.
MANIPULATION CRITERIA IN THE UNITED STATES
- A current-account surplus of at least 2% of GDP
- A bilateral trade surplus of at least $20 billion
- Foreign-exchange interventions of at least 2% of GDP
Taiwan’s central bank stated that it disagrees with the United States’ use of the same model previously used to decide if the Taiwan dollar is undervalued. It also denied Taiwan pursued an unfair trade advantage by currency market intervention, arguing that the free flow of large volumes of capital is the primary cause of exchange rate volatility and that foreign exchange transactions have no significance to international trade.
The US announced Friday that it would step up its engagement with Taiwan in order to counter what the study referred to as the Taiwan dollar’s “structural undervaluation.” Additionally, it reaffirmed Taiwan’s commitment to refrain from interfering in foreign exchange markets except in exceptional circumstances.
Taiwan’s central bank said that it would maintain contact with the US about this matter.