US Currency Monitoring List

India is one of the few countries that has recently been removed from the Department of Treasury's United States Currency Monitoring List.

What is the Currency Monitoring List of the United States?

• It is a twice-yearly report to Congress.
• The report examines the policies of the United States trading partners over the last four quarters, ending in June 2022.
• It has also removed Italy, Mexico, Vietnam, and Thailand from the list.
• The report also includes a look at the c."
• The list closely monitors the currency practices and policies of some of the United States' major trading partners.
• According to the report, economies that meet two or three criteria in the 2015 Act are placed on the list.
• Once on the list, an economy will stay there for at least two consecutive reports, allowing the Treasury to determine whether any improvements in performance are long-term and not due to temporary factors.

The Treasury Department must evaluate the macroeconomic and exchange rate policies of the United States' trading partners based on three criteria:

• A significant bilateral trade surplus with the United States is one that exceeds $15 billion in goods and services.
• A material current account surplus is one that exceeds 3% of GDP or one that the Treasury estimates has a material current account gap using Treasury's Global Exchange Rate Assessment Framework (GERAF).
• Persistent, one-sided intervention occurs when net purchases of foreign currency occur at least 8 times out of 12 months and total at least 2% of an economy's GDP over a 12-month period.

What exactly is a currency manipulator?

• Currency manipulators are countries that engage in "unfair currency practises" to gain a trade advantage, according to US government officials.
• Placing a country on the Currency Monitoring List indicates that the country is artificially depreciating its currency in order to gain an unfair advantage over others.
• This is because a lower currency value will result in lower export costs from that country.

Which countries are on the United States' currency watch list?

• China
• Japan\sKorea\sGermany
• Malaysia
• Singapore
• Taiwan

Why was India taken off the list?

• India and four other countries were removed from the Monitoring List because they no longer met all three criteria in two consecutive reports.
• For about two years, India has been on the list.
• China's failure to publish foreign exchange intervention and broader lack of transparency around key features of its exchange rate mechanism distinguishes it among major economies and necessitates close scrutiny by the Treasury.

Implications/ Importance

• Effective exchange rate management: This means that the Reserve Bank of India (RBI) can now take robust measures to effectively manage exchange rates without being labeled a currency manipulator.
• Growing role of India: This is a significant market victory that also reflects India's growing role in global growth.
• It denotes strong trade; investment and people-to-people ties contribute to bilateral, economic, and financial relationships, which are critical components of the India-US partnership.

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