U.S. to Start Consultations With Taiwan Over Currency -- Update
By Yuka Hayashi
WASHINGTON -- The Treasury Department put pressure on Taiwan to
address the undervaluation of its currency and large trade surplus
but stopped short of formally designating it a currency
The Treasury on Friday also reversed the Trump administration's
designations of Switzerland and Vietnam as currency manipulators.
It said it would continue talks with those two countries on their
currency and economic policies and begin discussions with
"Treasury has determined that there is insufficient evidence to
make a finding that Vietnam, Switzerland, or Taiwan manipulates its
exchange rate" under a 1988 law on trade and competitiveness, the
The Treasury issues a twice yearly report on major trading
partners to determine whether they are weakening their currencies
to give their exporters a competitive edge. Friday's report was the
first issued under Treasury Secretary Janet Yellen.
"Treasury is working tirelessly to address efforts by foreign
economies to artificially manipulate their currency values that put
American workers at an unfair disadvantage," Ms. Yellen said in a
The currency manipulation label was rarely used before the Trump
administration. Taiwan received the designation in the 1980s and
1990s, along with Japan and China.
The Trump administration branded China a manipulator in 2019
only to remove the label five months later after the two countries
concluded a deal that ended a trade dispute that started when the
administration imposed tariffs on many Chinese imports, triggering
retaliation. The administration designated Switzerland and Vietnam
in January of this year.
The Treasury's action on Taiwan Friday comes as the Biden
administration signals its willingness to deepen engagement with
the self-ruling island caught in the middle of escalating tensions
between Washington and Beijing.
President Biden dispatched a former U.S. senator and two former
diplomats to Taipei this week, where Taiwanese officials were
scheduled to brief the U.S. delegation about China's recent
provocations against the island and call for increased support from
Washington on trade, security and economic matters.
The Treasury uses three criteria to identify potentially unfair
currency practices: the extent of active intervention in currency
markets; the size of trade surpluses with the U.S.; and the size of
the country's current-account surplus, a broader measure of trade
that includes investment income and other financial flows.
Friday's report said Taiwan's central bank " continues to
actively intervene" in the foreign-exchange market.
In discussions with three trading partners, the Treasury said it
would consider the impact of the Covid-19 pandemic on their
currency and economic policies.
Francesco Pesole, foreign-exchange strategist at ING Bank in
London, said that the U.S. was sending a clear signal of concern
about currency practices, even though it didn't use the formal
"It's really a lot about the language, rather than about
practical impact or implications," he said. He said he would have
to see a few more reports to gauge how Ms. Yellen intends to
address concerns about currency practices in the long term.
The Treasury on Friday also added Ireland and Mexico to its
"monitoring list" of major trading partners that merit close
attention to their currency practices. China, Japan, Korea,
Germany, Italy, India, Malaysia, Singapore and Thailand remain on
India and Singapore intervened in the foreign-exchange market
"in a sustained asymmetric manner" during 2020 with the effect of
weakening their currencies, the department said.
Write to Yuka Hayashi at firstname.lastname@example.org
(END) Dow Jones Newswires
April 16, 2021 14:36 ET (18:36 GMT)
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