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
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.
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”.