Central Bank Deputy Governor Yang Chin-long (楊金龍)

Taipei, Oct. 18 (CNA) The United States' removal of Taiwan from its currency watch list can be attributed to the central bank's efforts to reduce its intervention in currency markets, Central Bank Deputy Governor Yang Chin-long (楊金龍) said Wednesday.

The U.S. Department of Treasury released on Tuesday its latest semi-annual report on the foreign exchange policies of 13 major U.S. trading partners, in which Taiwan was removed from its "Monitoring List" of economies engaged in potentially "unfair" currency practices.

The countries that were on the monitoring list were China, Japan, South Korea, Germany and Switzerland, but the Treasury Department concluded that no major trading partner met the standard for currency manipulation.

The report assesses currency policies based on three criteria: a bilateral trade surplus with the U.S. of at least US$20 billion, a material current account surplus of at least 3 percent of gross domestic product (GDP), and persistent, one-sided intervention in the foreign currency market.

Trading partners are considered to have unfair currency practices if they meet two of the three criteria.

Speaking at a legislative hearing, Yang said Taiwan was removed from the list because it met only one of the three criteria -- the material current account surplus -- for the two most recent reports in April and October 2017.

Taiwan met two of the three criteria in the October 2016 report -- including having engaged in persistent, one-sided intervention in foreign exchange markets -- but was found to no longer meet the intervention standard this year.

Yang said the central bank communicated effectively with the United States in stressing that the Taiwan dollar's exchange rate was essentially determined by market forces.

The U.S. Treasury acknowledged in its report that Taiwan has continued to reduce the scale of its foreign exchange interventions since April when its previous report was released.

But it believed Taiwan should "further increase the transparency of foreign exchange market intervention and reserve holdings."

"Taiwan is the only major emerging market economy in Asia not to publish data on the full details of its international reserves in accordance with the IMF Data Template on International Reserves and Foreign Currency Liquidity," the report said.

(By Tsai Yi-chu and Evelyn Kao)
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