Taiwan’s central bank yesterday urged the US to temporarily ease its monitoring of trading partners for currency manipulation during the ongoing COVID-19 pandemic.
The US Department of the Treasury should suspend its three criteria for designating major trading partners “currency manipulators” while the world battles the COVID-19, the central bank said in a statement on its Web site.
In its first foreign-exchange policy report on Friday last week, the administration of US President Joe Biden refrained from labeling any economy a currency manipulator, despite saying that Taiwan, Switzerland and Vietnam met the threshold.
Photo: Tyrone Siu, Reuters
The three criteria are having a trade surplus with the US of at least US$20 billion, a current account surplus exceeding 2 percent of GDP, and foreign-exchange interventions amounting to at least 2 percent of GDP.
Last year, Taiwan had a trade surplus of US$30 billion with the US, its account balance was 14.1 percent of GDP and its net foreign-exchange purchases amounted to about 5.9 percent of GDP.
The central bank said that it disagrees with the US applying the same model as used previously to determine whether the New Taiwan dollar is undervalued.
It also denied that Taiwan has sought to gain an unfair trade advantage by intervening in currency markets, saying that 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 on Friday said that it would initiate enhanced engagement with Taiwan to address what the report called the “structural undervaluation” of the NT dollar.
It also reiterated calls for Taiwan to refrain from intervening in foreign-exchange markets, except in exceptional circumstances.
It urged Taiwan to save less and invest more, including by encouraging consumption and building a stronger social safety net to help lower savings, “to diversify growth drivers away from exports” and “reduce the incentives to maintain an undervalued exchange rate.”
The last time Taiwan was named a currency manipulator by the US was in 1992.
On Friday, the Treasury Department said that it would engage with Taiwan, Switzerland and Vietnam to see if their actions constituted breaches of the Omnibus Trade and Competitiveness Act of 1988.
To be considered a currency manipulator, the US would also need to find, as required by the act, that a trading partner did so to prevent effective balance of payments adjustments or gain an unfair competitive advantage in trade.
The process to find evidence would continue, the report said.
Ireland and Mexico were added to the Treasury’s watch list, which means they met two of the three criteria for designation, while China, Thailand, India, Japan, South Korea, Germany, Italy, Singapore and Malaysia are on a monitoring list.
The agency said China’s “failure” to be more transparent around activities at state-owned banks warrants close monitoring. Those banks can act in currency markets with official guidance due to close relationships with China’s central bank.
“Treasury is working tirelessly to address efforts by foreign economies to artificially manipulate their currency values that put American workers at an unfair disadvantage,” US Secretary of the Treasury Janet Yellen said in a statement accompanying the report.
LIMITED IMPACT: Investor confidence was likely sustained by its relatively small exposure to the Chinese market, as only less advanced chips are made in Nanjing Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) saw its stock price close steady yesterday in a sign that the loss of the validated end user (VEU) status for its Nanjing, China, fab should have a mild impact on the world’s biggest contract chipmaker financially and technologically. Media reports about the waiver loss sent TSMC down 1.29 percent during the early trading session yesterday, but the stock soon regained strength and ended at NT$1,160, unchanged from Tuesday. Investors’ confidence in TSMC was likely built on its relatively small exposure to the Chinese market, as Chinese customers contributed about 9 percent to TSMC’s revenue last
With this year’s Semicon Taiwan trade show set to kick off on Wednesday, market attention has turned to the mass production of advanced packaging technologies and capacity expansion in Taiwan and the US. With traditional scaling reaching physical limits, heterogeneous integration and packaging technologies have emerged as key solutions. Surging demand for artificial intelligence (AI), high-performance computing (HPC) and high-bandwidth memory (HBM) chips has put technologies such as chip-on-wafer-on-substrate (CoWoS), integrated fan-out (InFO), system on integrated chips (SoIC), 3D IC and fan-out panel-level packaging (FOPLP) at the center of semiconductor innovation, making them a major focus at this year’s trade show, according
DEBUT: The trade show is to feature 17 national pavilions, a new high for the event, including from Canada, Costa Rica, Lithuania, Sweden and Vietnam for the first time The Semicon Taiwan trade show, which opens on Wednesday, is expected to see a new high in the number of exhibitors and visitors from around the world, said its organizer, SEMI, which has described the annual event as the “Olympics of the semiconductor industry.” SEMI, which represents companies in the electronics manufacturing and design supply chain, and touts the annual exhibition as the most influential semiconductor trade show in the world, said more than 1,200 enterprises from 56 countries are to showcase their innovations across more than 4,100 booths, and that the event could attract 100,000 visitors. This year’s event features 17
Germany is to establish its first-ever national pavilion at Semicon Taiwan, which starts tomorrow in Taipei, as the country looks to raise its profile and deepen semiconductor ties with Taiwan as global chip demand accelerates. Martin Mayer, a semiconductor investment expert at Germany Trade & Invest (GTAI), Germany’s international economic promotion agency, said before leaving for Taiwan that the nation is a crucial partner in developing Germany’s semiconductor ecosystem. Germany’s debut at the international semiconductor exhibition in Taipei aims to “show presence” and signal its commitment to semiconductors, while building trust with Taiwanese companies, government and industry associations, he said. “The best outcome
RSS