U.S. Treasury and Taiwan Central Bank Announce Exchange Rate Policies
The United States Department of the Treasury and the Central Bank of Taiwan have reaffirmed their commitment to cooperative economic practices. This partnership is facilitated through the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the U.S.
Collaboration on Exchange Rate Policies
Both parties have emphasized their intent to maintain regular consultations on macroeconomic and foreign exchange matters. They agreed on several key points regarding exchange rate manipulation and intervention strategies.
Avoiding Currency Manipulation
- Neither the U.S. nor Taiwan will manipulate their exchange rates.
- This commitment aims to prevent disruptions in balance of payments adjustments.
- The goal is to eliminate unfair competitive advantages in international trade.
Macroprudential Measures
The two authorities will ensure that any macroprudential measures or capital flow regulations do not target exchange rate levels for competitive reasons. Both agree on several investment guidelines:
- Pension funds and public investment vehicles will operate abroad for risk-adjusted returns.
- No public funds will be utilized to influence exchange rates for competitive gain.
Intervention in Foreign Exchange Markets
When considering interventions in the foreign exchange market, both sides agree that such actions should be reserved for moments of excessive volatility. This approach includes managing disorderly fluctuations in currency values.
Commitment to Transparency
The importance of transparency in exchange rate practices was highlighted in their discussions. Both parties committed to public disclosure regarding:
- Foreign exchange intervention operations disclosed quarterly with a lag.
- Foreign exchange reserves and forward positions shared according to the IMF’s guidelines on an equal quarterly basis.
This announcement reflects the ongoing commitment of the U.S. Treasury and the Taiwan Central Bank to maintaining stable and transparent economic practices in an interconnected global economy.
