United States, Taiwan Pledge Continued Action On Currency Manipulation

In a statement issued on Nov. 14, the U.S. Department of the Treasury and the central bank of Taiwan agreed to continue close consultations on macroeconomic and foreign exchange rate matters. The two entities also pledged to avoid manipulating the value of their own currencies to gain a competitive advantage.

The statement, available at this link, said the United States and Taiwan also concurred that:

• Any macroprudential or capital flow measures will not target exchange rates for competitive purposes;
• Other public investment vehicles such as pension funds invest abroad for risk-adjusted return and diversification purposes, and not to target the exchange rate for competitive purposes; and
• In cases when intervention in foreign exchange markets may be considered, it should be reserved for combatting excess volatility and disorderly movements in exchange rates, with the expectation that this tool would be considered equally appropriate for addressing excessively volatile or disorderly depreciation or appreciation.

Additionally, both sides concurred on the importance of transparent exchange rate policies and practices and committed to public disclosure of:

• Any foreign exchange intervention operations on at least a quarterly basis with a quarterly lag; and
• Foreign exchange reserves data and forward positions according to the International Monetary Fund’s Data Template on International Reserves and Foreign Currency Liquidity on a quarterly basis with a quarterly lag.