Taiwan has been removed from the U.S Department of the Treasury’s Monitoring List of major trading partners meriting close attention to their currency practices, according to the Ministry of Economic Affairs Oct. 18.
The decision, made largely on the basis of Taiwan’s progress in reducing the scale of its foreign-exchange interventions, is contained in the Foreign Exchange Policies of Major Trading Partners report presented the day before to U.S. Congress by the Treasury.
According to the semiannual report, Taiwan made around US$3 billion in net foreign exchange purchases since the previous edition in April, down roughly 50 percent from the same period last year.
The Treasury urged Taiwan to further increase the transparency of foreign exchange market intervention and reserve holdings, as it is the only major emerging economy in Asia not providing full disclosure of its international reserves pursuant to related International Monetary Fund guidelines.
In response, the MOEA Bureau of Foreign Trade said it will closely monitor related developments and urged local businesses to adopt appropriate measures and minimize possible impacts stemming from unfavorable currency fluctuations.
Removal from the list eliminates the risk of possible U.S. sanctions. These can be triggered if a country or territory satisfies three criteria: persistent, one-sided foreign-exchange intervention with net purchases of currency totaling at least 2 percent of gross domestic product over 12 months; a significant bilateral trade surplus of at least US$20 billion; and a material current account surplus equaling at least 3 percent of GDP.
Taiwan met one of the criteria—a material current surplus—in the current and previous report.
The five countries and territories remaining on the list are Germany, Japan, South Korea, Switzerland and mainland China, with none meeting all three criteria. (SFC-E)
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