The US department of treasury has added India to its watch list of countries whose foreign exchange and economic policies are under its close monitoring. Countries like China, Germany, Japan, and Korea have already been on the watch list. And, with the inclusion of India and Switzerland, the list grew to six.
The department said that no major US trading partner "was found to have met the legislative standards for currency manipulation."
"Treasury found that six major trading partners warrant placement on the "Monitoring List" of major trading partners that merit close attention to their currency practices, including five that continue on the list, China, Germany, Japan, Korea, and Switzerland, and India that has been added to the Monitoring List in this Report," the department stated in the semiannual report submitted before the Congress on macroeconomic and foreign exchange policies of major trading partners of the United States.
The report expressed concern over the lack of progress by China in correcting the bilateral trade imbalance. The report urged the Communist country, which is at the center of an ongoing trade tariff dispute, "to create a more level and reciprocal playing field for American workers and firms."
The report notes that "India increased its purchases of foreign exchange over the first three quarters of 2017. Despite a sharp drop-off in purchases in the fourth quarter, net annual purchases of foreign exchange reached $56 billion in 2017, equivalent to 2.2 percent of GDP".
"India has a significant bilateral goods trade surplus with the United States, totaling $23 billion in 2017, but India's current account is in deficit at 1.5 percent of GDP and the exchange rate is not deemed to be undervalued by the IMF," the report said.
It adds: "Given that Indian foreign exchange reserves are ample by common metrics, and that India maintains some controls on both inbound and outbound flows of private capital, further reserve accumulation does not appear necessary."
"The Treasury Department is working vigorously to ensure that trade is free, fair, and reciprocal so American workers and companies can compete and succeed globally," said US treasury secretary Steven T Mnuchin.
"We will continue to monitor and combat unfair currency practices while encouraging policies and reforms to address large trade imbalances," Mnuchin added.