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 manipulator.

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 Taiwan.

"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 department said.

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 statement.

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 designation.

"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 the list.

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


(END) Dow Jones Newswires

April 16, 2021 14:36 ET (18:36 GMT)

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