The US Treasury Department, on Tuesday, May 28th, 2019, removed India from its list of currency monitoring, of major trading partners. On the other hand, the US has kept China on the watch list, while urging the neighboring country of India to take immediate actions for avoiding a “persistently weak currency”.
"Treasury continues to urge China to take the necessary steps to avoid a persistently weak currency," US Treasury Secretary Steven Mnuchin said in a statement.
Noting further he also mentioned that China’s trade surplus with the US has also widened. That means, China’s goods trade surplus with the US now stands at $419 billion in the last four quarters, since December 2018.
The department of treasury, on Tuesday, removed India and Switzerland, in its semi-annual report to US Congress on International Economic and Exchange Rate Policies. The two were removed from the previous currency list of countries having questionable foreign exchange policies. The currency watch list also included Vietnam, Ireland, Italy, Japan, Germany, Malaysia, and Singapore, as per the department’s latest report.
According to this report, India has been removed from the monitoring list after having met only one out of three criteria, that is a significant bilateral surplus with the United States for two consecutive reports. Moreover it is being said that the Treasury Department has been citing steps being taken by New Delhi and happy with Modi for addressing some of the Trump's administration's major concerns.
Last year, in October, India was placed in the bi-annual currency list, along with Switzerland, China, Japan, Germany, and South Korea.
Treasury Secretary Mr. Mnuchin also said that the treasury found that nine major trading partners continue to warrant placement on Treasury’s Monitoring List of major trading partners (countries) that merit close attention to their currency practices.
Now with reserve adequacy in place a country can undervalue its currency intentionally by selling its own currency inturn driving down its's value. This makes its exports cheaper and more competitive. This scenario can be advantageous for India.
According to him, the department also denied its report to designate China or any other major trading partner as a currency manipulator.
The report concluded:
No trading partner was found to have met the 1988 legislative standards during the current reporting period.
The decision to keep China on the list, however, may spark some issues between India and the US. It will be interesting to see how things play out from the current situation.Share on Twitter Share on Facebook