US Treasury report: India swinging towards the FX manipulator camp - Nomura

There are a number of notable developments in the October 2017 US Treasury FX report, including an increased focus on India’s FX USD buying intervention and its bilateral goods trade surplus with the US, explains the research team at Nomura.

Key Quotes

“Taiwan was removed from the monitoring list, but Korea, Germany, China, Japan and Switzerland remain on it. Overall, the US Treasury continued to emphasise the need for more market-determined exchange rates and has proposals for those countries on its monitoring list.”

“Within Asia FX, criticism of China was relatively muted, except for the lack of progress on narrowing the bilateral trade surplus. We believe the step-up in criticism of India raises the risk of the Reserve Bank of India (RBI) engaging in less FX USD buying in future, especially given its current level of ample FX reserves. On Korea, the US Treasury has noted the lack of Bank of Korea (BOK) USD buying intervention in the past 12 months, but KRW is still viewed as undervalued. On Taiwan, the removal from the monitoring list may give the Central Bank of China (CBC) more flexibility to net-buy USD ahead, but we believe it will remain watchful not to break FX intervention criteria and be placed back on the list.”