TAIPEI (TAIWAN) – The United States may label Taiwan as a currency manipulator as it has already met Washington’s three main criteria for making such a decision, said the islands central bank governor Yang Chin-long on Thursday.
The islands central bank announced on Wednesday a large spike in its currency intervention spending last year, possibly putting the trade-dependent island in Washington’s crosshairs to be labelled a manipulator.
Taiwan’s trade surplus with the United States hit $29.9 billion in 2020, according to official data, almost $7 billion more than in 2019, while the current account surplus last year was around 11% of GDP. Both exceed by a wide margin Washington’s criteria for labelling a country a currency manipulator.
Yang who was answering questions in the parliament said that if this happens it would be no immediate disadvantage for Taiwan and they did not expect to be subject to so-called “Section 301” measures that might lead to tariffs.
It is important to communicate with the United States about the reasons for Taiwan’s strong currency, including the US quantitative easing policy and the effects of the China-US trade war, which have boosted exports of Taiwan tech and expanded its trade surplus with the United States, he said.
The Taiwan dollar’s 5.6% gain against the dollar last year was among the strongest in Asia. The boom continued this year on the back of thriving exports and a rebounding economy.
“The US dollar has recently been strong, and the Taiwan dollar exchange rate has been close to equilibrium. This is a good phenomenon,” he said.
Taiwan’s tech-focused economy has benefited from global demand for laptops, tablets and other equipment to support the work-from-home boom during the COVID-19 pandemic.
Yang said he foresaw a “V-shaped” recovery for the economy this financial year, and that they would likely revise up their growth forecast at next week’s quarterly meeting.