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"I
don't understand any economic logic," Anup Wadhawan, India's
commerce secretary told reporters. The Reserve Bank of India is
following a policy that allows currency movements based on
market forces, he said.
Last week, the U.S. Treasury Department put India along with 10
other economies including Singapore, Thailand and Mexico on the
"Monitoring List" that it said required close attention to their
currency practices.
The official said India's trade surplus with the United States
had gone up by nearly $5 billion in the financial year 2020/21
that ended on March 31.
India's bilateral trade surplus in goods with the United States
totalled $24 billion in 2020, along with a services trade
surplus of $8 billion, the U.S. report said.
Indian authorities should limit foreign exchange intervention to
"circumstances of disorderly market conditions, and refrain from
excessive reserve accumulation," the report said, while citing
higher purchases of dollars by the central bank on account of
capital flows.
Some economists said the latest move by the United States to put
India on the watchlist may discourage the central bank from
aggressive intervention in the foreign exchange market.
(Reporting by Manoj Kumar; Editing by Alison Williams and
Jacqueline Wong)
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