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Taiwan said it has never sought to use exchange rates to create a commercial advantage


© Reuters. Illustrative image of Taiwanese bill

By Liang-sa Loh

TAIPEI (Reuters) – Taiwan has never sought to use exchange rates to gain an unfair trade advantage, the central bank said on Sunday, after the US Treasury Department said Taiwan has stumbled upon the threshold of currency manipulation under U.S. trade law of 2015.

The US Treasury Department on Friday restricted formally labeling Taiwan, along with Switzerland and Vietnam, as manipulators, citing insufficient evidence under a separate law.

Taiwan’s technology-focused exports soared during the COVID-19 epidemic due to global demand for laptops, tablets and other devices to support the home work boom, boosting pushes the country’s trade surplus with the United States and increases the value of the Taiwan dollar.

The Sino-US trade war has also boosted the US demand for Taiwanese technology.

In a statement, the Taiwan’s central bank said it provided a report to the United States in advance of the Treasury’s decision, suggesting it suspend the three criteria used to evaluate manipulative behavior in pandemic.

“Due to the unique circumstances of the US-China trade dispute and the COVID-19 pandemic, the three current US inspection standards should not be used as appropriate indicators for the United States to evaluate its key policies. economic, trade and trade partners’ exchange rates, “it says.

Those thresholds are a bilateral trade surplus of more than $ 20 billion with the United States, foreign currency intervention in excess of 2% of gross domestic product, and a global current account surplus exceeding 2% of GDP.

When contacting the United States, the central bank said, they emphasized that Taiwan’s exchange rate policy “was aimed at maintaining an orderly and financially stable foreign exchange market, and never before. intention to gain unfair commercial advantages “.

Due to the free flow of capital globally, most forex transactions have “little relevance” to the import-export situation, it added. “Large and frequent movements of international funds have become the main cause of exchange rate fluctuations.”

The central bank also noted that Taipei and Washington have a close and mutually beneficial relationship, and they are “important partners in the technology supply chain”.

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