Taiwan could stay on U.S. currency monitoring list: Central bank

Taipei, April 19 (CNA) Taiwan could continue to be placed on the currency monitoring list of the United States Treasury Department, which is likely to release its twice-a-year foreign exchange policy report later in April, according to the Central Bank of the Republic of China (Taiwan).

Speaking with reporters, Tsai Chiung-min (蔡炯民), head of the central bank's Foreign Exchange Department, said on Friday that Taiwan could meet two of the three criteria set by the U.S. Treasury Department and see a continued inclusion into the currency watch list.

In November 2024, Taiwan was included in the watch list, marking its sixth straight appearance, based on the Omnibus Trade and Competitiveness Act of 1988 applied by the report, which analyzed the practices of Washington's major trading partners.

The U.S. Treasury report uses three criteria to determine which trading partners will be named as currency manipulators.

The three criteria include a bilateral trade surplus with the U.S. hitting at least US$15 billion and a material current account surplus accounting for at least 3 percent of an economy's gross domestic product (GDP).

The third criterion is designed to assess whether an economy gets involved in persistent one-sided intervention in the foreign exchange market when net purchases of foreign currency are conducted repeatedly, in at least eight out of 12 months, with these net purchases making up at least 2 percent of its GDP over 12 months.

When an economy meets two of the three criteria, it will be automatically put on the watch list. When an economy meets just one of the three criteria for two currency reports in a row, it will be removed from the monitoring list.

Tsai said that due to Taiwan's economic structure, it is expected to meet the first two criteria. In 2024, Taiwan's trade surplus with the U.S. hit US$73.9 billion. Its material current account surplus accounts for at least 3 percent of its GDP.

But Tsai said Taiwan was not expected to meet the third criterion because it is unlikely to be perceived as an economy involved in one-sided intervention in the forex market.

While there are rumors that the Taiwan dollar has been undervalued against the U.S. dollar to allow Taipei to enjoy a high trade surplus with the Washington, Tsai said the central bank's recent market intervention either prevented the local currency from falling too much or rising too rapidly.

Tsai said the central bank's intervention efforts were aimed at easing volatility in the market and maintaining order, adding the bank has never only sent the currency lower, but instead adopted a two-way approach.

Tsai reiterated that the central bank always respected a market mechanism when it came to the value of the Taiwan dollar.

Tsai said that although the Trump administration is highly unpredictable, Taiwan's central bank has built an effective communications channel with the U.S. Treasury Department, and both sides will continue to exchange views on issues such as the microeconomy and their forex policies.

Meanwhile, the central bank issued a report on Friday, saying it was inappropriate for the U.S. to use forex manipulation as a factor as it enters trade negotiations with other countries at a time when Washington wants to use tariff hikes against its trading partners, which have high trade surpluses with the U.S.

Citing Martin Feldstein, the former head of the U.S. Council of Economic Advisers, Taiwan's central bank said the U.S. has recorded a long-term current account deficit, which largely reflects its low domestic savings, instead of its trading partners' forex policies. The current account primarily measures a country's exports and imports of goods and services.

In the report, the central bank also agreed with Feldstein, saying that with the U.S. Federal Reserve using quantitative easing to adjust its monetary policy, which has sent the U.S. dollar lower, Washington cannot blame other countries for currency manipulation.

Tsai said a country with an imbalance in the current account needs to address an imbalance in domestic savings and investments, adding that a country with a large current account deficit should boost savings, while a country sitting on a large current account surplus should cut its excess savings.

(By Pan Tzu-yu and Frances Huang)

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