Central Bank Governor Yang Chin-long voiced concern Thursday that Taiwan may be placed back on the United States’ currency manipulation watch list. Taiwan had been on the watch list in 2016 and 2017.
The US Treasury Department puts countries on the watch list if they meet two of the following three criteria: maintain a trade surplus of more than US$20 billion, hold a current-account surplus in excess of 3% of GDP, or make unilateral interventions in currency markets that exceed 2% of GDP.
Taiwan is approaching the first two thresholds. That’s as Taiwanese companies benefit from shifts in electronics supply chains brought about by US tariffs on Chinese goods.
Though Taiwan risks being put back on the list, the Taiwan Institute of Economic Research says it is unlikely that the US will go further and label Taiwan as a currency manipulator. That’s because the US only labels countries currency manipulators if they surpass all three thresholds.