TAIPEI (Taiwan News) — The U.S. Treasury Department said Friday (April 16) there was insufficient evidence to label Taiwan as a currency manipulator despite the country having met its criteria for the designation.
In a semi-annual foreign exchange report issued by Treasury Secretary Janet Yellen on Friday, the department identified Vietnam, Switzerland, and Taiwan as meeting its three thresholds for possible currency manipulation.
The criteria the department uses to classify a country as a currency manipulator are having a trade surplus of at least US$20 billion with the U.S., foreign currency intervention exceeding 2 percent of gross domestic product, and a current account surplus exceeding 2 percent of GDP.
Taiwan was included on the watch list at the end of last year after meeting the first two criteria by having a trade surplus of US$30 billion and a current account balance exceeding 14.1 percent of its GDP. Its net foreign exchange purchases recently reached 5.84 percent of its GDP.
Although the three U.S. trading partners all met the criteria, the agency said there is not enough evidence at present to conclude they are manipulating their exchange rates to prevent balance-of-payments adjustments or gain an unfair competitive advantage in international trade. The U.S. Treasury said it would commence "enhanced engagement" with the countries to see if their actions breached the Omnibus Trade and Competitiveness Act of 1988.
The treasury pointed out that "meaningful actions to address policy distortions and increase data transparency will be critical" in its engagements with Taiwan. It urged the country to only intervene in the foreign exchange market "in exceptional circumstances of disorderly market conditions" and said it should try to save less and invest more.
Although the treasury did not designate China as a currency manipulator, it said the country will be included on the watch list along with 10 other economies: Japan, South Korea, Germany, Ireland, Italy, India, Malaysia, Singapore, Thailand, and Mexico.