The US has not found any of its major trading partners manipulating exchange rates to gain unfair competitive advantages, although seven economies including Taiwan are on its monitoring list, the central bank said yesterday.
The US Department of the Treasury on Thursday announced its conclusion in its semi-annual report to the US Congress on macroeconomic and foreign exchange policies of major trading partners.
Taiwan, along with China, Japan, South Korea, Germany, Malaysia and Singapore, is on the list.
Photo: Annabelle Chih, REUTERS
Taiwan’s large trade surplus and current account surplus with the US earned it the spot, but there is no need for enhanced engagement, the central bank said.
Strong exports have previously inflated Taiwan’s current account surplus and attracted hot money, the central bank said.
In the latest report, the US Treasury reviewed and assessed the policies of major US trading partners that account for about 80 percent of US foreign trade in goods and services over the four quarters through June.
The global economy saw supply and demand imbalances caused by the COVID-19 pandemic prior to Russia’s invasion of Ukraine, which has increased food, fertilizer and energy prices — further elevating global inflation and increasing food insecurity, it said.
The report acknowledged that emerging and developing economies might need a range of approaches — including intervention — to respond to current global economic conditions.
However, the bulk of interventions sought to strengthen their currencies, rather than weaken them, the report said.
Taiwan’s central bank has said it intervened in the foreign exchange market several times this year to slow the New Taiwan dollar’s depreciation caused by aggressive capital outflows in response to drastic monetary tightening by major central banks attempting to tame inflation.
US Secretary of the Treasury Janet Yellen said approaches to tackling global economic headwinds were warranted in certain circumstances.
The US Treasury said it would stay in close contact with Switzerland on its currency practices and trade imbalances.
Taiwan held several meetings with the US to exchange views on bilateral trade, economy and exchange rates, the central bank said, adding that currency rates largely reflect an economy’s fundamentals.
The US said it understood and supported Taiwan’s policy measures during the pandemic to shore up disadvantaged groups and stimulate domestic demand.
Taiwan’s communication channel with the US Treasury is smooth, and the two sides would continue to exchange views on economic and foreign exchange issues, the central bank said.
The report also reiterated US Treasury’s call for increased transparency from China.
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