India removed from US currency monitoring watch list
US government has removed India from its monitoring list for currency manipulation, clearing doubts over India’s foreign exchange policies including undervaluation of currencies to gain export advantages.
The US Treasury Department added Ireland, Italy, Malaysia, Singapore and Vietnam to the list.
However, the Donald Trump administration has decided not to label China or any other country currency manipulators. Though the designation does not entail any immediate penalties, it can affect the financial markets. In 1994, China was named a currency manipulator.
India, along with China, Japan, Germany, Switzerland and South Korea, was placed in the bi-annual currency watch list in October last year.
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. 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.
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 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 has 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 USD 4 billion, or 0.2 per cent of the GDP,” the Treasury had said in its October 2018 report.
