The Taiwan dollar has fallen sharply in the face of growing expectations that the United States will brand Asian countries as a currency manipulator, despite two strong ties in the face of increasingly aggressive China.
The administration of US President Joe Biden is widely expected to include Taiwan in its mid-term. Name and shame list This month because it meets three criteria used by the Treasury Department to evaluate whether a country is giving up its currency. Taiwan’s central bank governor, Yang Chin-long, has long acknowledged that Washington could identify the country as a driver.
Analysts, however, warned that imposing any tariffs on Taiwanese exports as a result of the surname could damage an important relationship in the region. Biden wanted Strengthen diplomatic relations Later Recent attacks The U.S. industry’s reliance on technology groups such as Taiwan Semiconductor Manufacturing Company has increased due to the global shortage of chips by Chinese military forces in Taiwan’s airspace.
“If [the US] We want to reduce our trade surplus with them, but we can only stop selling their chips, “Young joked at legislators at a recent hearing in Taipei.” But they are needed. “
For most of the first quarter, Taiwan’s currency fell more than 2 percent from its recent peak in early March and stood at 26.5 per dollar.
In addition to concerns that the United States could identify the country as a currency manipulator, the value of the Taiwan dollar has also risen further as global markets have changed.
Emerging U.S. Treasury yield Making Taiwan’s debt relatively less attractive to investors around the world, on the other hand, widespread transfers from growth stocks such as technology have stopped selling shares of Taipei-listed semiconductor manufacturers. These factors have hit the demand for valuable assets in the Taiwanese dollar.
The appointment of economist Brad Setsar to the U.S. Trade Representative’s office in February has raised expectations that the Biden administration will target Taiwan. Setar’s critical report on the currency hodgepodge strategy used by Taizar’s central bank was cited by the Treasury when he placed the country on its watch list last year.
Analysts indicated in the trading patterns of the Taiwanese dollar in January and February that they believe the central bank’s efforts to limit appreciation in the currency by supporting the important export industry indicated.
During the period, Taiwan’s currency traded stronger against the dollar early in the day before weakening again in the final stages of trading. Iris Pang, the head of ING, a major Chinese economist, said he had suggested the central bank be involved. “It simply came to our notice then. . . There is a very strange campaign going on in the Taiwan dollar foreign exchange market, ”he added.
A book by current and former central bank officials alleges that policymakers’ resistance to strong currencies has hurt Taiwan, encouraging many exporters to focus on making products cheaper than innovative ones.
Taiwan’s central bank declined to comment on the country’s foreign exchange policy.
Even as the US manages Taiwan’s brand as a currency manipulator, some analysts believe that Washington cannot impose tariffs because of the fragile nature of regional geopolitics.
“When it comes to Taiwan, it’s not just the economy, it’s always politics,” said Pang of ING.