Taiwan's furniture sector, heavily reliant on the U.S. market, is battling the twin challenges of an appreciating currency at home and recession overseas.

And it's doing pretty well, company and government officials said at a trade show that opened Tuesday.Taiwan's furniture exports earned $1.5 billion in the first eight months of last year, according to the China External Trade Development Council, which sponsors the show. That represented an increase of 11 percent from the 1990 period.

Many exporters are reducing dependence on the United States, said Chen Chi- chang of the council's market development division.

"Before, Taiwan exporters just paid attention to the U.S. Now they have a better understanding of the European market," he said.

While the United States still takes the majority of Taiwan's furniture, the proportion is shrinking. In 1990, U.S. buyers accounted for 65 percent of total overseas shipments. Last year, that probably fell to 60 percent, Mr. Chen estimated.

Sales to Western Europe in 1990 were 10 percent of the total. The official couldn't give an estimate for last year.

The appreciation of the New Taiwan dollar, up to 25 to the U.S. dollar, from 27.5 a year ago, should not hurt most furniture producers, according to Cecil Wang, president of Master Home Furniture Co.

"Most manufacturers can handle it. They are already used to the higher level," he said, noting that the currency was at 40 to the dollar five years ago.

Much of the upward push was orchestrated by the United States to cut Taiwan's trade surplus.

For the first 11 months of last year, the U.S. Commerce Department says Taiwan had a surplus of $9 billion, compared with $10.4 billion at the same stage of 1990. The 1990 full-year figure was $11.2 billion, down from $13 billion in 1989.

Not everyone is so sanguine about the impact of higher currency values. James Ko, sales manager at Datong Rattan Furniture Co., which sells wooden and metal items to the United States, was glum.

"The situation is terrible. With the rise in the NT dollar and the recession in the U.S., things are quite tough for us," he said.

As with other local industries, furniture makers are coping in part by shifting production offshore to Southeast Asia, where they find cheaper labor.

Manufacturers are also upgrading their lines, according to Mr. Chen of the trade council. A decade ago, most made accessories like coat stands and magazine racks; now they do dining room sets and office furniture. The increase in quality has also brought innovations in design, several people at the show said.