The US Treasury should suspend its three criteria for designating major trading partners currency manipulators while the world battles the coronavirus, Taiwan’s central bank said in a statement on its website today in response to the latest US foreign-exchange policy report.
The US refrained from labelling any economy a currency manipulator in the Biden administration’s first report published Friday, despite acknowledging that Taiwan, Switzerland and Vietnam all met the threshold.
US Manipulation Criteria
- A current-account surplus equivalent to at least 2% of GDP
- A bilateral trade surplus of at least US$20 billion
- Foreign-exchange interventions amounting to at least 2% of a country’s GDP
Taiwan’s monetary authority said it disagrees with the US applying the same model as used previously to determine whether the Taiwan dollar is undervalued.
It also denied Taiwan has sought to gain an unfair trade advantage by intervening in currency markets, insisting the free movement of large amounts of capital is the main cause of exchange-rate fluctuations and foreign-exchange transactions have little relevance to international trade.
The US said Friday it will initiate enhanced engagement with Taiwan to address what the report called the “structural undervaluation” of the Taiwan dollar. It also reiterated calls for Taiwan to refrain from intervening in foreign-exchange markets except in exceptional circumstances.
Taiwan’s central bank said it would continue its communication with the US over this issue.