The United States Department of the Treasury and the Taiwan central bank have agreed to continue their close consultations on macroeconomic and foreign exchange issues. This decision was made under the auspices of the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States.
Both parties confirmed their commitment to avoid manipulating exchange rates or the international monetary system for the purpose of preventing effective balance of payments adjustment or gaining an unfair competitive advantage.
They also agreed that any macroprudential or capital flow measures will not be used to target exchange rates for competitive reasons. Public investment vehicles, such as pension funds, will invest abroad with a focus on risk-adjusted returns and diversification, rather than targeting exchange rates for competitive purposes. In situations where intervention in foreign exchange markets is considered, both sides stated that this should only occur to address excessive volatility or disorderly movements in exchange rates. The expectation is that intervention would be appropriate whether there is excessively volatile depreciation or appreciation.
Transparency in exchange rate policies was emphasized by both parties. They committed to publicly disclosing any foreign exchange intervention operations at least quarterly, with a quarterly lag. Additionally, they will release data on foreign exchange reserves and forward positions according to the International Monetary Fund’s Data Template on International Reserves and Foreign Currency Liquidity, also on a quarterly basis with a quarterly lag.
"The United States Department of the Treasury and the Taiwan central bank, under the auspices of the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States, decided to continue their close consultations on macroeconomic and foreign exchange matters. Both sides confirmed that they will avoid manipulating exchange rates or the international monetary system to prevent effective balance of payments adjustment or to gain an unfair competitive advantage."
"Any macroprudential or capital flow measures will not target exchange rates for competitive purposes; other public investment vehicles such as pension funds invest abroad for risk-adjusted return and diversification purposes, and not to target the exchange rate for competitive purposes; and in cases when intervention in foreign exchange markets may be considered, it should be reserved for combatting excess volatility and disorderly movements in exchange rates, with the expectation that this tool would be considered equally appropriate for addressing excessively volatile or disorderly depreciation or appreciation."
"Both sides concurred on the importance of transparent exchange rate policies and practices. Both commit to public disclosure of: any foreign exchange intervention operations on at least a quarterly basis with a quarterly lag; and foreign exchange reserves data and forward positions according to the IMF’s Data Template on International Reserves and Foreign Currency Liquidity on a quarterly basis with a quarterly lag."
