TAIPEI: Taiwan's current account surplus for the first quarter narrowed to 12 percent of its gross domestic product, data from the island's central bank showed Friday, remaining above a US threshold used to monitor possible currency manipulators.
A Taiwan senior central banker said it would be tough to further narrow the surplus in the short term, highlighting how difficult it will be for central bank chief Perng Fai-nan to get Taiwan completely removed from the US watch list.
In the first quarter, the current account surplus totalled $16.39 billion, lower than a revised $19.45 billion in Q4 2016 and $19.58 billion a year ago, based on the central bank's latest figures.
That put the surplus at around 11.8 percent of Taiwan's nominal GDP of $138.68 billion in the first quarter, according to government figures. That was down from 14 percent of nominal GDP in Q4 2016 and 15.3 percent a year ago.
"This is the characteristic of small and open economies," deputy central bank governor Yang Chin-long said at a news briefing.
But at nearly 12 percent, the island's current account surplus remained well above the 3 percent threshold set by the US Treasury Department to monitor potential currency manipulators among major trading partners.
Taiwan appeared again alongside China, Japan, South Korea, Switzerland and Germany on the latest list published in April of countries that the United States would monitor.
The Taiwan dollar has been one of the best performing currencies in Asia this year so far as the central bank, keen to get Taiwan off the watch list, has refrained from intervening against any appreciation.
Yang said that a large amount of net foreign inflows into Taiwan's stock and bond markets have been behind the strength in the local dollar against the greenback.
He warned that foreign investors may be "stir frying" the local dollar by parking funds in the domestic bonds, which currently have low yields.
The central bank will maintain order in the forex market if excessive volatility is not beneficial to economic and financial stability, the central bank said.
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