US Removes India From Its Currency Monitoring List, What Does It Mean?
After two years, the US Department of Treasury withdrew India from its list of significant trading partners on its Currency Monitoring List. Pay particular attention to the macroeconomic policies and currency practises of the nations on the list. Italy, Mexico, Thailand, and Vietnam have all been taken off the list along with India.
The US Department of Treasury listed the seven economies that are now under observation as China, Japan, Korea, Germany, Malaysia, Singapore, and Taiwan in its biannual report to Congress.
It stated that the nations who were taken off the list have only complied with one of the three requirements for two reports in a row. An economy that has been added to the Currency Monitoring List stays there for at least two reports in a row.
The US Treasury Department examined and evaluated major US trading partners’ policies in this study, which covered the four quarters through June 2022 and represented almost 80% of US exports of goods and services abroad.
How Does It Affect India?
A nation is regarded as a “currency manipulator” if it appears on the US’ Currency Monitoring List. The US government designates nations that use “unfair currency practises” to their advantage in international trade as currency manipulators.
Vivek Iyer, partner and leader at Grant Thornton Bharat, said, “This (the removal from US’ Currency Monitoring List) means that the Reserve Bank of India (RBI) can now take robust measures to manage the exchange rates effectively, without being tagged as a currency manipulator. This is a big win from a markets standpoint and also signifies the growing role of India in global growth.”
The RBI recently made decisions like buying dollars during times of surplus inflows and selling dollars during times of outflows to control currency rates amid the rupee’s decline.
A nation would be on the Currency Monitoring List if it artificially devalued its currency in order to acquire an unfair competitive advantage. This is because the country’s export costs will be reduced as a result of the currency’s decreased value.
The US Department of Treasury publishes a biannual report that follows trends in the world economy and analyses currency exchange rates. It also examines the 20 largest trading partners of the United States’ monetary policies.