India’s addition to the US treasury’s monitoring list for currency manipulation makes it more likely the Reserve Bank of India (RBI) will give freer rein to the rupee when it rises against the dollar, analysts say.

India increased its purchases of foreign currency last year and has a “significant" trade surplus with the US, the treasury noted in its semi-annual report on foreign-exchange practices released in Washington on Friday.

The rupee has been the second-worst performing Asian currency this year, dropping 2.4% against the dollar, after strengthening 6.4% in 2017.