Taiwan Faces Two Red Lines as Central Bank Struggles to Halt TWD Appreciation
The U.S. Treasury's upcoming currency report indicates that Taiwan meets two key criteria, ensuring its continued placement on the currency manipulation watch list, though it will not be officially labeled a manipulating nation. Financial experts believe that the recent strong appreciation of the New Taiwan Dollar coincides with the timing of the report, as hot money flows are impacting the currency market, causing a stress test for the Central Bank.
As of November last year, Taiwan has been listed five consecutive times on the currency manipulation watch list. According to the report, guidelines from the U.S. involve trade surpluses exceeding $15 billion, a current account surplus greater than 3% of GDP, and a net foreign exchange purchase ratio over 2% of GDP. Given the circumstances, the Central Bank is cautious and reluctant to take aggressive measures during ongoing trade negotiations with the U.S.
