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US starts pushing Taiwan to address undervalued currency

Treasury says island exceeds threshold but stops short of calling it a manipulator

U.S. Treasury Secretary Janet Yellen: The Treasury Department said it will continue its "enhanced engagement" with Vietnam and begin such engagement with Taiwan.   © Reuters

WASHINGTON -- The U.S. Treasury said Taiwan, along with Vietnam and Switzerland, have engaged in market interventions to keep their currencies undervalued in the department's semiannual foreign exchange report released Friday, but stopped short of naming them currency manipulators.

Taiwan joins Vietnam and Switzerland as countries meeting the criteria under a 2015 U.S. currency manipulation law. Despite its finding, Treasury said there is insufficient evidence to conclude that they are manipulating their exchange rates.

The Treasury said it will conduct "enhanced engagement" with all three, calling for specific actions to correct the undervaluation of their currencies and trade imbalances. Should the issues persist, the Treasury will consider enacting retaliatory tariffs and other sanctions.

"Treasury is working tirelessly to address efforts by foreign economies to artificially manipulate their currency values that put American workers at an unfair disadvantage," Secretary of the Treasury Janet Yellen said Friday.

A Taiwan central bank official told Reuters that good communication had helped the U.S. authorities understand Taiwan's "special situation," referring to the decision not to label the island a currency manipulator.

China and Japan also remain on "monitoring list" of U.S. trading partners whose currency practices are being closely watched.

The Treasury said it has urged China "to improve transparency regarding its foreign exchange intervention activities, the policy objectives of its exchange rate management regime, the relationship between the central bank and foreign exchange activities of the state-owned banks, and its activities in the offshore [yuan] market."

The former Trump administration had designated China as a currency manipulator in 2019 amid a growing trade war between the countries. China was later removed from the list in January 2020. U.S. President Joe Biden is also expected to ramp up pressure against China. But in contrast to Trump's focus on tariffs and other trade barriers, Biden has been pushing to reshape and bolster U.S. supply chains for semiconductors and other key items.

The Treasury releases the Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States twice a year, usually in April and October.

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