The US Treasury has recently announced that Indian currency will be included in their Currency Watch list.
- The US Treasury has sighted two major reasons for that – India’s foreign exchange net addition and its bilateral trade surplus with the US.
Highlights
- USA has included total 6 countries in the watchlist- China, Mexico, Japan, South Korea, Switzerland and India.
- The US Treasury Department in a report to Congress said that foreign exchange policies of these countries needed to be closely monitored.
- The US Treasury Department uses three parameters to include a currency in their Currency Watch List
- Bilateral trade surplus with the US to be $20 billion
- current account surplus at 3% of country’s GDP
- Net purchases of foreign currency to be at least 2% of country’s GDP over a year.
- India’s net annual purchases of foreign exchange reached $56 billion in 2017, equivalent to 2.2 percent of GDP — which breached the third criterion.
- India’s goods trade surplus with the United States was $23 billion in 2017, which breached the first criterion.
- The Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States concluded that no trading partner was found to have met the legislative standards for currency manipulation during the current reporting period.
- According to the Department, the findings and recommendations are intended to prevent unfair currency practices, support the growth of free and fair trade, and secure stronger and more balanced global growth.
- Achieving these goals require that all economies durably avoid macroeconomic, foreign exchange, and trade policies that facilitate unfair competitive advantage.
