THE US Treasury added India to its watch list of countries with potentially questionable foreign exchange policies, joining China and four others, according to a report issued last Friday (13).

The Treasury said the “monitoring list” includes those “major trading partners that merit close atten­tion to their currency practices”.

In addition to India, the semi-annual report to Congress names five countries that continue on the list from October – China, Germany, Japan, Korea and Switzerland.

Countries remain on the list for two report cycles “to help ensure that any improvement in perfor­mance versus the criteria is durable and is not due to temporary factors”.

While no major trading partner was found to be manipulating its currency, five of those on the list meet two of the three criteria, while China is in­cluded because “it constitutes a disproportionate share of the overall US trade deficit”.

The US has a deficit of $337 billion (£236bn) with China of a total global trade deficit of $566bn (£396bn), according to government data.

“We will continue to monitor and combat unfair currency practices, while encouraging policies and reforms to address large trade imbalances,” US treasury secretary Steven Mnuchin said.

The Treasury report is required by Congress to identify countries that are trying to artificially man­age the value of their currency to gain a trade advan­tage, for example by keeping the exchange rate low to promote cheaper exports.

The report said India, which has a $23bn (£16bn) trade surplus with the US, “increased its purchases of foreign exchange over the first three quarters of 2017,” although the rupee still rose in value.

And while China – which is at the center of a brewing trade dispute with Washington – remained on the watch list, the Treasury said “the Chinese currency generally moved against the dollar in a di­rection that should” help reduce China’s trade sur­plus with the US.

Germany also remained on the watch list, even though it is part of the European currency union, which means it cannot independently control the exchange rate for the euro.

Even so, the report notes that Germany “has the world’s largest current account surplus” and has made “little to no progress in reducing this massive surplus the past three years”.

The Treasury called for all the countries on the list to implement economic reforms to address their surpluses. (AFP)