In its semi-annual foreign exchange report presented to Congress, the US administration left dropped the names of India and Switzerland from its currency monitoring list. The list currently includes China, Japan, South Korea, Germany, Italy, Ireland, Singapore, Malaysia, and Vietnam.
"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 report on macroeconomic and foreign exchange policies of major trading partners of the US sent to the Congress.
This is a positive development for India as it is out of the currency watch list radar, which could have ultimately led to a tag of being a currency manipulator.
Countries which indulge in manipulating the currency exchange rate for gaining unfair competitive advantage in international trade often end up with the tag of a currency manipulator.
The US Department of Treasury releases the semi-annual report where it has to track developments in international economies and inspect foreign exchange rates. If any trade partner of the US meets a three-assessment review, bilateral talks are held to resolve the issues.
However, it seems that India and Switzerland met only one of the three criteria that attract a currency manipulator tag, which could lead to a slowdown in financial markets. Both countries have reported similar outcomes for two consecutive currency watchlist reports.
According to the report, India had a significant trade surplus while Switzerland had a material current account surplus.
In both Switzerland and India, there was a notable decline in 2018 in the scale and frequency of foreign exchange purchases, the report 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 by 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.
