US Treasury Dept Adds India to Currency Manipulation Watchlist

The US Treasury Dept found 10 economies warranting placement on the ‘Monitoring List’  that merit close attention.

(Image: IANS)

The US on Wednesday, 16 December, added India along with Taiwan and Thailand to the 'monitoring list' of ‘currency manipulating countries’ that includes major trading partners like China and six others. It also branded Vietnam and Switzerland as currency manipulators, PTI reported.

WHY IS INDIA ON THE ‘MONITORING LIST’?

In its press release, the US Treasury Department said it found that ten economies warrant placement on Treasury’s “Monitoring List” and “merit close attention to their currency practices”. India, Thailand and Taiwan were named among these ten countries as three that were “being added in this Report.”

Over the four quarters through June 2020, four major US trading partners, including India, intervened in the foreign exchange market in a sustained, asymmetric manner, US Treasury Department said.

WHAT IS THE US TREASURY DEPT SAYING?

The Treasury found that 10 economies warrant placement on Treasury's 'Monitoring List' of major trading partners that merit close attention to their currency practices. These ten countries are China, Japan, Korea, Germany, Italy, Singapore, Malaysia, Taiwan, Thailand, and India, PTI reported

"The Treasury Department has taken a strong step today to safeguard economic growth and opportunity for American workers and businesses," said US Treasury Secretary Steven Mnuchin.

WHAT DOES RBI DATA SHOW?

Based on Reserve Bank of India's regularly published intervention data, India's net purchases of foreign exchange accelerated notably in the second half of 2019, and following sales during the initial onset of the pandemic, India sustained net purchases for much of the first half of 2020, the report said.

This pushed net purchases of foreign exchange to $64 billion, or 2.4 percent of GDP, over the four quarters through June 2020.

"Treasury continues to welcome India's long-standing transparency in publishing foreign exchange purchases and sales," the report said, adding that it encourages the authorities to limit foreign exchange intervention to periods of excessive volatility, while allowing the rupee to adjust based on economic fundamentals, the PTI report said.

India for several years has maintained a significant bilateral goods trade surplus with the United States, which totalled $22 billion in the four quarters through June 2020, it said.

The Treasury said that India has been exemplary in publishing its foreign exchange market intervention, publishing monthly spot purchases and sales and net forward activity with a two-month lag.

The RBI states that the value of the rupee is broadly market-determined, with intervention used only to curb undue volatility in the exchange rate.

(With inputs from PTI)