, Edited by Summary Desk | New Delhi |
Updated: December 17, 2020 11:59:48 p.m.
The United States has once again placed India on a watch list of countries with potential “questionable foreign exchange policies” and “currency manipulation”. This comes a year after the annual foreign exchange report submitted to the US Congress was removed from the US Treasury Department’s watch list.
What does the term ‘currency manipulation’ mean?
This is the label given by the US government to countries they consider to be engaging in “inappropriate currency practices” by deliberately devaluing their currencies against the dollar. This exercise would mean that the country in question is artificially devaluing its currency to gain an unfair advantage over others. This is because this mistrust will reduce the cost of exporting from that country and consequently reduce the trade deficit through artificial trade. Follow the express explained on Leg Telegram
What criteria are used?
An economy that meets two of the three criteria of the Trade Facilitation and Trade Enforcement Act 2015 has been placed on the watch list. These include:
1. A “significant” bilateral trade surplus with the United States – one that is at least 20 billion over a 12-month period.
2. A material current account surplus equals at least 2 percent of gross domestic product (GDP) over a 12-month period.
“. “Fixed”, one-sided intervention – when at least 2 percent of the country’s gross domestic product (GDP) is net purchased in a 12-month period in at least six of the 12 months.
Once on the watch list, an economy will be there for at least two consecutive reports “to help ensure that any improvement in performance against standards is sustainable and not due to temporary factors,” according to the US Treasury Department. According to.
The administration will maintain and maintain on the watch list any major U.S. trade partnership that is part of a “large and non-cooperative” share of the overall U.S. trade deficit, even if the economy does not meet three criteria from the 2015 Act. Descending. ”.
Which other countries are on the latest watch list?
The US Department of the Treasury Department, in its latest report to the US Congress, has placed India, Taiwan and Thailand on its watch list of key trading partners to monitor their monetary practices and macroeconomic policies. ”Want.
Other countries in the latest list include China, Japan, Korea, Germany, Italy, Singapore and Malaysia.
India was last included in the Currency Watchlist in October 2018, but was removed from the list in May 2019.
The position of a country as a currency manipulator does not immediately attract a penalty, but rejects the belief about a country in the world financial markets.
Why is India on the watch list again?
According to the latest report, India, which has maintained a “significant” bilateral trade surplus with the United States for many years, has crossed the 20 billion mark. The total trade surplus in the first four quarters between June 2020 was 22 22 billion.
India’s net foreign exchange purchases have grown particularly sharply in the second half of 2019, according to central bank intervention data. After sales during the initial launch Ubiquitous epidemic, India continued to buy heavily in the first half of 2020, pushing net foreign exchange purchases to 64 64 billion in the four quarters during June 2020 – or 2.4% of GDP.
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