TAIPEI (Taiwan News) — Taiwan's central bank announced on Thursday (June 18) it would maintain the current interest rate while lowering the estimated growth of gross domestic product (GDP), considering the economic woes caused by the Wuhan coronavirus (COVID-19) in the first half of 2020.

The central bank's decision is based on the relatively stable domestic economy, given the government's expansionary fiscal policy and increasing cash flows in the banking system have counteracted the downturn inflicted by COVID-19. The current interest rate, rediscount rate, and rate on accommodations with collateral are pegged at 1.125 percent, 1.5 percent, and 3.375 percent, respectively.

On the other hand, as the whole country is still recovering from economic losses, the central bank has lowered the estimated annual GDP growth to 1.52 percent. This move would serve to suggest the economy has already passed the most critical period and business will begin to recover.

According to the central bank's governor, Yang Chin-long (楊金龍), the recent increase in the New Taiwan Dollar's value is derived from the sudden spike of foreign investment inflows in June. Money could possibly flow out again after August when most Taiwan enterprises finish distributing dividends to their shareholders.

As the central bank increased market intervention to cope with this year's economic turbulence, some commentators have raised concerns about whether Taiwan would be listed by the U.S. as a currency manipulator.

During the latest legislative interpellation, Yang said Taiwan has met two criteria set by the U.S. Treasury Department to avoid being labeled a currency manipulator. These include having a more than $20 billion trade surplus with the U.S., and the surplus surpassing 3 percent of Taiwan's total GDP.

The final criterion is that Taiwan does not follow "persistent one-way intervention in foreign exchange markets," Liberty Times reported.