TAIPEI (Reuters – Taiwan understands Taiwan’s policy on exchange rates and they have good communication. This was after Taiwan was placed on the U.S. Treasury monitoring list.
According to the U.S. Treasury, Taiwan continues to surpass certain thresholds of possible currency manipulation. The Treasury added Taiwan to its monitoring list for partners who merit careful attention to macroeconomic policies and currency practices.
An official at the central bank spoke under anonymity and said that Taiwanese officials had spoken via teleconference over the past year.
According to the official, “We are in good communication.” The official stated that the U.S. understands Taiwan’s policy regarding its exchange rate.
In line with broader weakness of currencies in Asia, including South Korea and Taiwan, the Taiwan dollar fell more than 6% this year against the U.S. Unit.
In March, the central bank stated that it had bought $9.12 billion last year to enter the foreign exchange markets. This is down from $39.1 billion in 2020. It equates to 1.2% GDP. However, this amount does not exceed the threshold set by the U.S Treasury to qualify as a manipulator.
However, Taiwan’s trade surplus reached $40.2 billion with the United States in 2021. This is a record and an increase of almost 30% over 2020. The current surplus of Taiwan last year was 14.8%. Both meet the U.S. Treasury criteria for currency manipulation.
The central bank official said that Taiwan and the United States would continue to talk about currency issues.
Taiwan’s key position as a semiconductor manufacturer has helped boost its exports. Taiwanese firms’ order books have also been kept full due to a chip shortage worldwide that has mainly affected the auto sector.
The United States last officially labeled Taiwan a currency manipulater in December 1992.