Taiwan says it is an important partner and will continue to speak to US on currency By Reuters
© Reuters. FILE PHOTO: The flags of Taiwan and the United States are set for a reunion in Taipei, Taiwan, March 27, 2018. REUTERS / Tyrone Siu / File Photo
TAIPEI (Reuters) – Taiwan and the United States have a mutually beneficial trade relationship, especially in the area of technology, and the two have “smooth” channels of communication and will continue to speak to each other on currency matters, a Taiwan’s central bank said on Saturday.
Taiwan, along with Vietnam, once again exceeded US Treasury thresholds for possible currency manipulation and improved analysis under a 2015 trade law, but the department on Friday refrained from officially labeling them manipulative. .
In response, Taiwan’s central bank reiterated that the trade surplus with the United States was due to the Sino-US trade war, which saw companies shifting production from China to avoid tariffs, and the skyrocketing technology demand from U.S. consumers during the COVID-19 pandemic.
“The expansion of the trade surplus with the United States has nothing to do with exchange rate factors,” he said in a statement, echoing comments from a central bank official Friday night.
Taiwan’s current account surplus was also affected by the same factors, with growth in domestic savings contributing to the surplus as Taiwanese companies increased their investments in their country and people were unable to travel or spend that much because of the pandemic, he added.
“For a long time, our country and the United States have enjoyed close and mutually beneficial bilateral trade relations, and are important partners in the technology supply chain,” the central bank said.
“The communication channels between the bank and the US Treasury are smooth, and the two sides will continue to communicate on relevant issues in the future on the basis of good interaction.”
The US Treasury said it was working with Taiwan to develop a plan that included “specific actions to tackle the underlying causes of the Taiwanese currency’s undervaluation and excessive external surpluses.”
The Taiwanese dollar is up more than 2.5% against the greenback this year, among the best performing Asian currencies.
Taiwan’s case is complicated by geopolitical pressures, including heightened military tensions with China, and the island’s position as a major exporter of semiconductors that are needed to help alleviate a supply shortage for American manufacturers.
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