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Current Affairs

India put on currency manipulator list

Date: 18 December 2020 Tags: Miscellaneous


The United States has once again included India in its monitoring list of countries with “currency manipulation” policies.



This move comes a year after India was removed from the watchlist in the US Treasury Department’s semi-annual foreign-exchange report to the US Congress.



  • Currency manipulator is a label given by the US government to countries it feels are engaging in “unfair currency practices” by deliberately devaluing their currency against the dollar.

  • The practice would mean that the country in question is artificially lowering the value of its currency to gain an unfair advantage over others.

  • This is because the devaluation would reduce the cost of exports from that country and artificially show a reduction in trade deficits as a result.

Parameters to classify currency manipulators

  • A significant bilateral trade surplus with the US, which is at least $20 billion over a 12-month period.

  • A material current account surplus equivalent to at least 2 percent of gross domestic product (GDP) over a 12-month period.

  • When net purchases of foreign currency totalling at least 2 percent of the country’s GDP over a 12 month period are conducted repeatedly, in at least six out of 12 months.


Other countries on the list

  • Other countries in the latest list comprise China, Japan, Korea, Germany, Italy, Singapore, Malaysia, Taiwan and Thailand.

  • India was last included in the currency watchlist in October 2018, but removed from the list that came out in May 2019.

Why India has been included?

  • India’s bilateral goods trade surplus with the US totalled $22 billion in the first four quarters through June 2020, which is more than the $20 billion threshold.

  • India’s net purchases of foreign exchange accelerated notably in the second half of 2019. This pushed net purchases of foreign exchange to $64 billion–or 2.4% of GDP–over the four quarters through June 2020.

Implications of the move

The designation of a country as a currency manipulator does not immediately attract any penalties, but tends to dent the confidence about a country in the global financial markets.