Taiwan's central bank denied Saturday that it has engaged in exchange rate manipulation, emphasizing that its job is to maintain a stable currency exchange rate for the nation.
Commenting on a report released by the United States Department of Treasury on the foreign exchange policies of its major trading partners a day earlier placing Taiwan, China, Japan, South Korea, Germany and Switzerland on a monitoring list, the central bank issued a statement that said Taiwan has a trade-oriented open economy in which imports and exports account for a high percentage of GDP.
As such, Taiwan is unable to embrace completely free exchange rate fluctuation, the nation's monetary policy maker noted.
The central bank said that it will continue to communicate with the U.S. Department of Treasury on the operation of the foreign exchange market in Taiwan.
The twice yearly report is based on the provisions of the Trade Facilitation and Trade Enforcement Act of 2015, also known as the Customs Bill. The provisions of the Customs Bill provide the U.S. government with new monitoring tools and measures to address unfair currency practices.
The U.S. Treasury said in its report that all six countries on the watch list meet two of the three criteria for enhanced analysis. The three criteria are: a significant bilateral trade surplus with the U.S., hitting US$20 billion; a material current account surplus, which accounts for more than 3 percent of an economy's GDP; and involvement in persistent one-sided intervention in the foreign exchange market.
No economy in the latest report met all of the three criteria, according to the U.S. Treasury.
"Taiwan has a current account surplus well above the material threshold and, per Treasury estimates, has engaged in persistent net foreign currency purchases in the 12 months through June 2016," the report said.
"Such interventions limit currency appreciation that would generally reduce Taiwan's very large and growing current account surplus," the report added.
Source: Focus Taiwan News Channel