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US Treasury removes India from its Currency Monitoring List after two years

Nov 12, 2022

The US Department of Treasury on Friday removed India along with Italy, Mexico, Thailand and Vietnam from its Currency Monitoring List of major trading partners that merit close attention to their currency practices and macroeconomic policies.

India had been on the list for the last two years.

The move came on a day when Secretary of the Treasury Janet Yellen visited New Delhi and held talks with Finance Minister Nirmala Sitharaman.

China, Japan, Korea, Germany, Malaysia, Singapore, and Taiwan are the seven economies that are a part of the current monitoring list, the Department of Treasury said in its biannual report to the Congress.

The countries that have been removed from the list have met only one out of three criteria for two consecutive reports, it said.

"China's failure to publish foreign exchange intervention and broader lack of transparency around key features of its exchange rate mechanism makes it an outlier among major economies and warrants Treasury's close monitoring," said the report.

Notably, Switzerland once again exceeded the thresholds for all three criteria, which is a parameter for being labelled as a "Currency Manipulator".

But the term was not used by the Report and the Treasury Department maintained that there is not enough evidence to use the label for Switzerland.

The Treasury will continue its enhanced bilateral engagement with Switzerland, which commenced in early 2021, to discuss the Swiss authorities' policy options to address the underlying causes of its external imbalances, a media note said.

In this report, Treasury reviewed and assessed the policies of major US trading partners, comprising roughly 80 per cent of US foreign trade in goods and services, during the four quarters through June 2022.

"The global economy was already dealing with supply and demand imbalances caused by COVID-19 prior to Russia's illegal war against Ukraine, which has increased food, fertilizer, and energy prices, further elevating global inflation and increasing food insecurity," said Treasury Secretary Yellen.

Major economies facing different stresses may accordingly pursue different policies, which can be reflected in currency movements. The Treasury is cognizant that a range of approaches by developing and emerging economies to global economic headwinds may be warranted in certain circumstances, she said.


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