The Trump administration again refrained from naming any major trading partners as currency manipulators on Friday as it pursues potential tariffs and negotiations to try to cut a massive trade deficit with China.
In its semi-annual currency report, the U.S. Treasury said it has added India to a monitoring list for extra scrutiny, while keeping China, Japan, Germany, South Korea and Switzerland on the list started in 2016.
The Treasury said that India had increased its foreign exchange purchases over the first three quarters of 2017, with full-year purchases reaching a record $56 billion in 2017, or 2.2 percent of the country's gross domestic product.
"Given that Indian foreign exchange reserves are ample by common metrics, and that India maintains some controls on both inbound and outbound flows of private capital, further reserve accumulation does not appear necessary," the Treasury said in its report.
India ran a goods trade surplus of $23 billion in 2017 with the United States, far less than China's $375 billion goods trade surplus.
Treasury's report did not mention President Donald Trump's recent threats to impose billions of dollars worth of tariffs on Chinese goods over Beijing's intellectual property practices.
It said China's yuan in 2017 on a trade-weighted basis was broadly unchanged against the dollar.
"The increasingly non-market direction of China's economic development poses growing risks to its major trading partners and the long-term global growth outlook," the Treasury said.
It added that China should advance macroeconomic reforms that support greater household consumption growth and help rebalance the economy away from investment.
It also said the Treasury "places significant importance" on China adhering to its G20 commitments to refrain from engaging in competitive devaluation of its yuan.
Some China experts have speculated that Beijing could use yuan devaluation as a weapon in a broader trade war with the United States.
© (c) Copyright Thomson Reuters 2018.