There is no need for the Treasury to put out its foreign exchange report on time this April. There are other, more pressing priorities. And if it does, the Treasury should exercise its discretion to allow those countries that came close to meeting the definition of manipulation last year off the hook.

Blog Post by Brad W. Setser  March 11, 2020

Taiwan’s central bank (the Central Bank of the Republic of China, or the CBC) helped make this an easy call with a significant increase in its disclosure last week.

It disclosed two things on Wednesday

One that its true foreign exchange position is over $600 billion, as it has over $30 billion in domestic foreign currency bank deposits as well as almost $100 billion in foreign currency swaps with local financial institutions.

And two, that its actual intervention in the market in 2019 was $5.5 billion ($6.6 billion if you look just at the second half of 2019, as it reported that it sold in the first half of 2019). That’s around a percentage point of its GDP, below the Treasury threshold. Remember all those Taiwanese bond ETF purchases? That’s a probably big reason why the CBC didn’t have to intervene that much, as the lifers could buy ETFs (technically local currency products) unhedged (though the ETFs do now carry a higher capital charge).