NEW DELHI - India was taken to surprise upon entry on the US Treasury’s currency watchlist last week, however it can get yet another blow by further labelled as manipulator of the rupee.
The Treasury cited India’s “significant” trade surplus with the US and increased purchases of foreign currency last year as reasons for increased scrutiny of the Asian economy. Taiwan and Thailand, both of whom run significant current account surpluses and whose central banks have actively intervened in currency markets, weren’t added to the list.
A spokesman for the Reserve Bank of India declined to comment on the Treasury report, which identifies three criteria to label a country as a currency manipulator: a bilateral trade surplus of at least $20 billion, a current account surplus of 3% of gross domestic product or more, and foreign exchange intervention of at least 2% of GDP in the past year.
“There is very little chance that India will meet all three criteria and be called a manipulator, as it has persistently been running current account deficits since 2005,” Khoon Goh, head of Asian research at Australia & New Zealand Banking Group Ltd. in Singapore, wrote in a note on Monday.