The US Treasury plans to closely monitor India's foreign exchange and macro-economic policies in view of a continuous accumulation of dollars by the country in the last one year to support the value of Indian rupee. According to the US Treasury's report titled Foreign Exchange Policies of Major Trading Partners of the United States, over the first half of 2017, there has been a notable increase in the scale and persistence of India's net foreign exchange purchases which have risen to around $42 billion, equivalent to 1.8 per cent of GDP, in the four quarters ended June 2017.
One of the three criterions the treasury has established for determining whether there is a need for enhanced analysis and vigilance of any country's foreign exchange policies is its net purchases of dollars touching two per cent of GDP in the trailing 12 months. The aim of the US Treasury behind this monitoring is that to ensure that the trading partners do not indulge in unfair currency practices. India is very close to meeting this criterion for the four quarters ending June 2017, with net purchases of foreign currency slightly below 2 percent of GDP.
Foreign exchange reserves as of June 2017. GDP measured as the 4Q rolling sum through Q2 2017.Sources: National authorities, World Bank, IMF, Haver; Short-term debt consists of gross external debt with remaining maturity of one year or less, as of Q1-2017
India has a significant bilateral goods trade surplus with the United States, totalling $23 billion over the four quarters through June 2017.
Foreign exchange reserves grew steadily in Korea, India, and Taiwan,, and currently are at or near all-time highs for all three economies. For the rest of the world, foreign currency reserves declined by $410 billion between mid-2014 and mid-2017. This primarily reflected a fall in reserves among oil exporters, particularly those with less flexible exchange rate regimes.