US Include Taiwan On Currency Monitoring List

The US Treasury announced today it would put Taiwan on its currency monitoring list, but stopped short of labelling it a currency manipulator.

• There are three criteria that must be met for a country to be named a manipulator. The country must have a significant bilateral trade surplus with the US and have a material current account surplus of at least 2%. The country must also engage in persistent one-sided intervention that totals 2% of GDP over a 12-month period.
• Taiwan has taken umbrage at the inclusion on the list and insists that the benchmarks used by the US Tsy are disputed.
• When questioned by lawmakers in the wake of the announcement about allowing TWD appreciation, CBC deputy governor Yen Tzung-ta said the US had never put too much pressure on TWD.
• TWD has strengthened this year, gaining around 6% against the US dollar. The CBC was recently asked by regulator Yuan Control to explain the central bank's market regulation effects.
• The issue is particularly sensitive for Taiwan as the government is keen to stay in the global communities' good books as it seeks to secure a US trade deal and applies to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
• USD/TWD last down 0.166 at 28.134, but off lows of 28.122 hit earlier in the session.
• The CBC rate announcement later in the day is in focus, no changes are expected in policy settings, but there may be some rhetoric around FX levels. Full preview here