US Gov Removes India from 'Currency Watchlist', Keeps China

Guwahati, May 29, 2019:

Amid rising trade-tensions with Asian superpower China, the US government has removed India from its currency monitoring watchlist. In its semi-annual foreign-exchange report to the Congress, the US Treasury Department did not mention India's name in the watchlist of countries with potentially 'questionable' foreign exchange policies.

India, along with China, Japan, Germany, Switzerland and South Korea, was placed in the bi-annual currency watch list in October last year.

The US, however, continued to keep China on its watchlist, while urging the Asian nation to take necessary steps to avoid a "persistently weak currency".

"Treasury continues to urge China to take the necessary steps to avoid a persistently weak currency," said US Treasury Secretary Steven Mnuchin in a statement.

It may be mentioned that US President Donald Trump has often slammed China for its currency practices.

Designation as a currency manipulator comes with no immediate penalties but can rattle financial markets.

India and Switzerland were removed because for two consecutive reports they had both met only one of three criteria necessary for inclusion on the monitoring list.

While India had a significant bilateral surplus, Switzerland had a material current account surplus, according to the report.

India, along with China, Japan, Germany, Switzerland and South Korea, was placed in the bi-annual currency watch list in October last year.

The latest report removed India and Switzerland from the list but added Ireland, Italy, Malaysia, Singapore and Vietnam.

The US, however, continued to keep China on its watch list, while urging the Asian nation to take necessary steps to avoid a "persistently weak currency".

"Treasury continues to urge China to take the necessary steps to avoid a persistently weak currency," said US Treasury Secretary Steven Mnuchin in a statement.

Currency policy has emerged as President Donald Trump’s latest tool to rewrite global trade rules that he says have hurt American businesses and consumers. He has made foreign-exchange policy a key piece of trade deals with Mexico, Canada and South Korea, and it’s expected to be part of an agreement with China, should one be reached.