Taiwan says it is an important partner and will continue to negotiate with the United States on exchange rate issues Reuters

© Reuters. File photo: The flags of Taiwan and the United States meet in Taipei, Taiwan on March 27, 2018. REUTERS/Tyrone Siu/File Photo

Taipei (Reuters)-The Central Bank of Taiwan said on Saturday that Taiwan and the United States have mutually beneficial trade relations, especially in terms of technology. The two have “smooth” communication channels and will continue to engage in dialogue on exchange rate issues.

According to the 2015 Trade Law, Taiwan and Vietnam once again exceeded the threshold of possible exchange rate manipulation set by the US Treasury Department and strengthened analysis, but the department did not formally list them as manipulators on Friday.

In response, the Central Bank of Taiwan reiterated that the trade surplus with the United States was due to the fact that the Sino-US trade war caused companies to shift production from China to China to avoid tariffs, as well as the surge in US consumer demand for technology during the COVID-19 pandemic.

“The expansion of the US trade surplus has nothing to do with exchange rate factors,” it said in a statement, repeating comments made by central bank officials late Friday.

It added that Taiwan’s current account surplus is also affected by the same factors. As Taiwanese companies increase investment in the country and people are unable to travel or consume due to the pandemic, domestic savings growth has contributed to the surplus.

“For a long time, my country and the United States have maintained close and mutually beneficial bilateral trade relations and are important partners in the technology supply chain,” the central bank said.

“The communication channel between the bank and the U.S. Department of the Treasury is open. In the future, the two sides will continue to communicate on related issues on the basis of good interaction.”

The U.S. Treasury Department stated that it is working with Taiwan to develop a plan that contains “specific actions to address the root causes of Taiwan’s currency undervaluation and excessive external surplus.”

The New Taiwan dollar has risen more than 2.5% against the U.S. dollar this year, making it one of the best performing Asian currencies.

Taiwan’s situation is complicated by geopolitical pressures, including increased military tensions with China, and the island’s status as a major exporter of semiconductors, which helps alleviate supply shortages for US manufacturers.

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