US removes India from its currency watch list
29 May 2019
The Trump administration has removed India from its currency monitoring list of major trading partners, citing certain developments and steps being taken by New Delhi which address some of its major concerns.
The Trump administration also removed Switzerland from the currency monitoring list that included China, Japan, South Korea, Germany, Italy, Ireland, Singapore, Malaysia and Vietnam among others.
“India has been removed from the monitoring list in this report, having met only one out of three criteria – a significant bilateral surplus with the US – for two consecutive reports,” the Treasury Department said in its latest semi-annual report on macroeconomic and foreign exchange policies of major trading partners of the US sent to the Congress.
In its semi-annual report to US Congress on International Economic and Exchange Rate Policies, the department on Tuesday removed India and Switzerland from the previous currency watch list of countries with potentially questionable foreign exchange policies.
After purchasing foreign exchange on net in 2017, the central bank steadily sold reserves for most of 2018, with net sales of foreign exchange reaching 1.7 per cent of GDP over the year, it said.
India maintains ample reserves according to the IMF metrics for reserve adequacy, it said.
In both Switzerland and India, there was a notable decline in 2018 in the scale and frequency of foreign exchange purchases, the report said.
“Neither Switzerland nor India met the criteria for having engaged in persistent, one-sided intervention in either the October 2018 report or this report. Both Switzerland and India have been removed from the monitoring list,” the Treasury said in its report running into over 40 pages.
India for the first time was placed by the US in its currency monitoring list of countries with potentially questionable foreign exchange policies in May 2018 along with five other countries - China, Germany, Japan, South Korea and Switzerland.
In its next report in October 2018, the Treasury had said that India had made improvements and its name would be removed from the currency manipulation list in the next report.
“India’s circumstances have shifted markedly, as the central bank’s net sales of foreign exchange over the first six months of 2018 led net purchases over the four quarters through June 2018 to fall to $4 billion, or 0.2 per cent of the GDP,” the Treasury had said in its October 2018 report.
India, along with China, Japan, Germany, Switzerland and South Korea, was placed in the bi-annual currency watch list in October last year.
The US, however, continued to keep China on its watch list, while urging the Asian nation to take necessary steps to avoid a "persistently weak currency".
"Treasury found that nine major trading partners continue to warrant placement on Treasury's 'Monitoring List' of major trading partners that merit close attention to their currency practices," Mnuchin said.
However, the department, in its report, has declined to designate China or any other major trading partner as a currency manipulator.
Treasury continues to urge China to take the necessary steps to avoid a persistently weak currency," said US Treasury Secretary Steven Mnuchin in a statement.
He also noted that China's trade surplus with the US has also widened.
Mnuchin stated that China's renminbi had fallen against the dollar by eight per cent over the last
"China's goods trade surplus with US stands at $419 billion over the four quarters through December 2018," the report said.