Taiwan denies using swaps to intervene in currency market

January 14, 2020 11:26
Taiwan's central bank will continue to dialog with the United States, an official said. Photo: Bloomberg

Taiwan’s central bank has never used swaps to intervene in the currency market, a senior central bank official told Reuters on Tuesday, after the US Treasury Department cited an analyst report suggesting the island was doing so.

The US Treasury, as part of its semi-annual report on foreign exchange policies of major US trading partners, said it was “concerned” by recent analysis from the US Council of Foreign Relations “suggesting that Taiwan may have engaged in substantial undisclosed foreign exchange intervention in the swap market”.

The report said the analysis estimated Taiwan has conducted “undisclosed foreign exchange intervention in the swap market totaling approximately US$130 billion, and perhaps as much as US$200 billion”.

The senior Taiwan central bank official, speaking on condition of anonymity, denied that swap market intervention took place.

The Treasury report also said that Taiwan and Thailand were close to triggering thresholds to be added to the currency monitoring list.

A second Taiwan central bank official told Reuters that they have “smooth communication channels” with the United States, and would continue to the dialog with them.

Two sources told the news agency in November that Taiwan’s central bank and Ministry of Economic Affairs had set up a group to coordinate stepped up purchases of US goods, as the island seeks to reduce its trade surplus and head off being labeled a currency manipulator.

Taiwan was last labeled a currency manipulator by the US in December 1992 and was later put on the US Treasury monitoring list in 2016 and 2017.

Taiwan’s trade surplus with the US for the January to November period of last year already exceeded US$20 billion, meeting one of the criteria Washington uses for putting trade partner nations on the monitoring list. Reuters

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