Taiwan dollar touches new high versus US dollar

Taiwan’s dollar climbed to its highest in a month, outperforming Asian peers, after a Treasury report hinted U.S. officials could exert greater pressure on the island’s central bank to allow its currency to appreciate, Bloomberg reports.

The Taiwanese currency gained by 0.5 percent to 28.196 against the US dollar, its strongest since March 16. The Treasury report on Friday didn’t label Taiwan as a currency manipulator but said the U.S. will initiate “enhanced bilateral engagement” to address what it considers as “structural undervaluation” of the exchange rate.

The Treasury report cites research published in November 2018 that assesses the Asian currency to be undervalued by 21 percent, giving a rough guide to the scale of appreciation the U.S. would deem appropriate. Six of the report’s 60 pages were devoted to analysis of and recommendations for Taiwan, more than any other trading partner, signaling the importance it attaches to the value of the Asian currency.

While Taiwan’s central bank doesn’t deny intervening in currency markets, it pushed back against aspects of the U.S. assessment in a statement Sunday. It also urged the Treasury to ease its monitoring of trading partners for currency manipulation during the ongoing Covid pandemic.

“Yellen is pragmatic and prudent,” Taiwan’s central bank governor Yang Chin-long told lawmakers Monday. “We need to show more than just our sincerity about communicating with the U.S.” Taiwan has already held two meetings with the Treasury this year over its currency, Yang added.