The United States may label Taiwan a currency manipulator, said Taiwan central bank governor Yang Chin-long Thursday.
Taiwan has now reached three of the criteria Washington uses to label a country a currency manipulator, including how much it spent on currency intervention in 2020.
Yang, answering lawmaker questions in parliament, added that if this happens it would not be too serious and that there 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.
Yang said it is important to communicate with the US about the reasons for Taiwan’s strong currency, including the U.S. quantitative easing policy and the effects of the China-U.S. trade war, which have boosted exports of Taiwan tech and expanded its trade surplus with the United States.
The Taiwan dollar’s 5.6 percent gain against the greenback last year was among the strongest in Asia and it has continued to rise this year on the back of booming exports and a rebounding economy, though Yang saw signs for optimism.
“The U.S. 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 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 US 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 percent of GDP. Both exceed by a wide margin Washington’s criteria for labelling a country a currency manipulator.
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 year, and that they would likely revise up their growth forecast at next week’s quarterly meeting.