The US Department of Treasury has removed India from its currency Monitoring List. The other countries that have been dropped from the watch list include Italy, Mexico, Vietnam and Thailand.
The Department of Treasury said in its biannual report to the Congress that China, Japan, Korea, Germany, Malaysia, Singapore, and Taiwan are part of the current Monitoring List.
The report states that China’s failure to publish foreign exchange intervention and broader lack of transparency around key features of its exchange rate mechanism make it an outlier among major economies and warrants Treasury’s close monitoring.
The move came on a day Secretary of the Treasury Janet Yellen visited India and held talks with Finance Minister Nirmala Sitharaman.
The Treasury has established a Monitoring List of “major trading partners that merit close attention to their currency practices and macroeconomic policies”.
The US Treasury Department lists a trading partner on the watchlist if that so-called country had intervened in the currency market by higher levels than 2 per cent of its GDP over a 12-month period, and had a current account surplus of 2 per cent of GDP and a trade surplus with the US.
“Once on the Monitoring List, an economy will remain there for at least two consecutive Reports to help ensure that any improvement in performance versus the criteria is durable and is not due to temporary factors,” the report said.
It said as a further measure, Treasury will add and retain on the Monitoring List any major US trading partner that accounts for a large and disproportionate share of the overall US trade deficit even if that economy has not met two of the three criteria from the 2015 Act.
“The Administration strongly opposes attempts by the United States’ trading partners to artificially manipulate currency values to gain unfair advantage over American workers. Treasury continues to press other economies to uphold the exchange rate commitments they have made in the G-20, the G-7, and at the IMF,” the report said.
In the report, the Treasury reviewed the 20 largest US trading partners against the thresholds Treasury has established for the three criteria in the 2015 Act.
The report said US Treasury continues to carefully track the foreign exchange and macroeconomic policies of US trading partners under the requirements of both the 1988 Act and the 2015 Act, and to review the appropriate metrics for assessing how policies contribute to currency misalignments and global imbalances.
It also said the US administration “has strongly advocated for our major trading partners to carefully calibrate policy tools to support a strong and sustainable global recovery”.
