It is not good news for India to be included in the ‘Currency Manipulator List’. America has also taken this step regarding India in 2018.
Symbolic picture
US Adds India to Currency Manipulator Monitoring List: America has given a strong shock to India once again. It has put India on the watch list of ‘currency manipulators’ (currency manipulating countries) (Currency Manipulator Watchlist Meaning). On this, India replied on Tuesday and said that any logic of this is beyond comprehension. India’s Commerce Secretary Anoop Wadhwa said, “I don’t understand any economic logic in this”. He told that the Reserve Bank of India allows such a policy, under which the collection of currency is done according to the market forces.
The United States Finance Ministry has included a total of 10 countries including India in this list. These include Singapore, China, Thailand, Mexico, Japan, Korea, Germany, Italy and Malaysia (US Treasury Currency Watchlist). The ministry has said that the ‘close watch’ will be kept on currency collection and other related methods in these countries. The official said that India’s trade surplus (trade surplus) with America has increased by about five billion dollars in the year 2020-21. Here trade surplus means that the export of a country exceeds its imports.
What was India asked to do?
In this report of the US, it is written that in the year 2020, India’s bilateral trade surplus with goods was $ 24 billion. Which includes a financial surplus of $ 8 billion for services. Advising India in the report said that it (India) should limit foreign exchange intervention. India should do this without accumulating too much reserve (US Currency Watchlist Meaning). Significantly, this is not happening for the first time, when America has taken this step regarding India. Earlier in 2018, India was also included in the list but then removed in 2019.
Meaning of joining the list?
Being included in the list of ‘currency manipulators’ is not good news for India at all. Economists say that with this move of America, India will have trouble in making aggressive intervention in the foreign exchange market. However, it is also not a new thing for America to do this (What is Currency Manipulator List). He lists different countries from time to time. Apart from India, China has also been included in the list many times. The US believes that it puts only those countries in the list that adopt ‘unfair currency behavior’, so that their own currency is devalued against the dollar.
Why would any country do this?
Now the question also arises that of course a country tries to devalue its currency, but why does it do so? So any country does this so that with its help it can artificially decrease its currency and it can also take unfair advantage from others. The advantage of devaluing the currency will be that the cost of exports from that country will come down and this will also result in an artificial reduction in the trade deficit.
How is a country included?
Which country has to be included in the list of ‘currency manipulators’ and not whom, different parameters are seen for it. America sees how and how much the trade surplus has increased in a financial year in the country concerned. Along with this, the total GDP of the country and the amount of money stored in it is also seen (Currency Manipulator Watch List). The reason behind the inclusion of India in this list has been attributed to increase in dollar purchase and trade surplus by the Central Reserve Bank.
What do the figures say?
According to reports, recently there was news that India’s trade surplus with America has exceeded 20 billion dollars. Apart from this, the central bank’s data also said that India had shown a boom in the purchase of foreign currency by the end of 2019 (Currency Manipulator Country). According to the data, till June of the year 2020, India had purchased foreign currency worth $ 64 billion. This number is 2.4 percent of GDP. If a country is considered to be a ‘currency manipulator’, then no penalty is imposed on it immediately. But after joining this list, the credibility in the global finance market of that country definitely decreases.
Also read- Awesome insult! Emraan targeted the opposition through a Bollywood film;
Also read- US: Judge was giving verdict on Derek Chauvin here, another black man shot and killed by police
.