India Shines In Macroeconomic Policy As US Hints At Removing It From List Of Currency Manipulators

As reported by the Press Trust of India, the US Treasury Department said that it could remove India from its infamous currency monitoring list. It cited steps taken by the Indian government that addressed some of its major concerns.

The US had placed India in the list for the first time in April 2018, Japan, South Korea, China, Switzerland and Germany are also part of the list. According to US, the monitoring list includes countries with potentially questionable foreign exchange, and being on the monitoring list implies that the US will engage with the country and persuade it to change its forex and macroeconomic policies in order to reduce the surplus and/or foreign currency intervention, as the case may be.

The US treasury department, in its latest report, has still retained India in the monitoring list. However, it said, India could be removed if it persists with the same practices as the last six months.

Between late 2013 to the middle of 2017, the Reserve Bank of India shored up India’s forex reserves to build a formidable buffer of approx. $400 billion in the aftermath of the May 2013 "taper tantrum". This buying of dollars by India had attracted attention of the Trump government, and it accused India of artificially keeping its currency depreciated. A lower dollar to rupee value boosts India’s exports. India has a significant bilateral goods trade surplus with the US, totalling $23 billion over the four quarters through June 2018.