Washington: The US has added India to the currency practices and macroeconomic policies monitoring list, saying New Delhi increased its purchase of foreign exchange over the first three quarters of 2017 which does not appear necessary.
India is the sixth addition to the watch list which comprises China, Japan, South Korea, Germany and Switzerland.
“India increased its purchase of foreign exchange over the first three quarters of 2017. Despite a sharp drop-off in purchase in the fourth quarter, net annual purchase of foreign exchange reached USD 56 billion in 2017, equivalent to 2.2 per cent of the GDP,” the US Department of the Treasury said in its semi-annual report to the Congress.
The pick-up in purchases came amidst relatively strong foreign inflows, both of foreign direct investment and portfolio investment, it said.
Treasury told the Congress that India has a significant bilateral goods trade surplus with the US, totalling USD 23 billion in 2017, but India’s current account is in deficit at 1.5 per cent of the GDP and the exchange rate is not deemed to be undervalued by the IMF.
Treasury assesses net purchases of foreign currency, conducted repeatedly, totalling in excess of 2 per cent of an economy’s GDP over a period of 12 months to be persistent, one-sided intervention, the report said.
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