Earlier this week, the US Department of Treasury removed India, Italy, Mexico, Thailand and Vietnam from its Currency Monitoring List of major trading partners that require scrutiny of their currency policies and macroeconomic policies.
The country has been on the list for the last two years.
In conjunction with her visit to New Delhi, Treasury Secretary Janet Yellen held discussions with Finance Minister Nirmala Sitharaman.
This year’s monitoring list includes China, Japan, Korea, Germany, Malaysia, Singapore, and Taiwan, according to the Department of Treasury’s biannual report to Congress.
The report stated that a country that has been removed from the list has met only one of three criteria for two consecutive reports.
As a result of China’s failure to disclose foreign exchange interventions and lack of transparency regarding critical features of its exchange rate mechanism, the country stands out among major economies and requires close monitoring by Treasury,” according to the report.
Furthermore, Switzerland was once again deemed a “currency manipulator” after exceeding the threshold for all three criteria.
However, the term was not used in the report, and the Treasury Department maintained insufficient evidence to support its use.
It is announced in a media note that the Treasury will continue its enhanced bilateral engagement with Switzerland, which began in early 2021, to discuss the Swiss authorities’ options for addressing the underlying causes of its external imbalances.
According to this report, Treasury reviewed and assessed the policies of the major US trading partners, representing approximately 80% of US foreign trade in goods and services during the four quarters up to June 2022.
Despite Russia’s illegal war against Ukraine, the global economy already faced supply and demand imbalances caused by COVID-19, which has increased food, fertilizer, and energy prices, further elevating worldwide inflation and rising food insecurity, according to Treasury Secretary Yellen.
Different policies may be adopted by major economies facing various stresses, which can be reflected in the movement of their currencies. According to the Treasury, there are certain circumstances in which developing and emerging economies may be justified in taking a range of approaches in response to global economic headwinds.
