ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Currencies

Taiwan says never sought to use exchange rate for trade advantage

  © Reuters

TAIPEI (Reuters) -- Taiwan has never sought to use foreign exchange rates to gain an unfair trade advantage, the central bank said on Sunday, after the U.S. Treasury said Taiwan tripped thresholds for possible currency manipulation under a 2015 U.S. trade law.

The U.S. Treasury Department on Friday refrained from formally labelling Taiwan, along with Switzerland and Vietnam, as manipulators, citing insufficient evidence under a separate law.

Taiwan's tech-focused exports have soared during the COVID-19 pandemic because of global demand for laptops, tablets and other equipment to support the work-from-home boom, driving its trade surplus with the United States and jacking up the value of the Taiwan dollar.

The China-U.S. trade war has also boosted U.S. demand for Taiwanese technology.

In a statement, Taiwan's central bank said it had provided a report to the United States ahead of the Treasury's decision suggesting they suspend the three criteria used to judge manipulation during the pandemic.

"Due to the special circumstances during the U.S.-China trade dispute and the COVID-19 pandemic, the current three U.S. inspection standards should not be used as appropriate indicators for the U.S. to assess the economic, trade and exchange rate policies of its trading counterparts," it said.

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

The central bank said that when communicating with the United States it had emphasised that Taiwan's exchange rate policy "aims to maintain an orderly foreign exchange market and financial stability, and has never intended to gain unfair trade advantages".

Given the global free movement of capital, most foreign exchange transactions have "little relevance" to the import and export situation, it added. "The huge and frequent movement of international funds has become the main cause of exchange rate fluctuations."

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

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more