India remains on US Treasury Department’s currency watch list
Washington:
India on Friday remained on the US Treasury Department’s currency “Watch List” of major trading partners as Washington ranked India along with 11 other major economies paying close attention to its currency practices. currencies and their macroeconomic policies.
The U.S. Treasury Department says the countries are China, Japan, South Korea, Germany, Italy, India, Malaysia, Singapore, Thailand, Taiwan, Vietnam and Mexico.
All but Taiwan and Vietnam (with increased commitments) were included on the Monitoring List in the December 2021 Report, a media release said.
“The Administration continues to strongly advocate for our major trading partners to carefully calibrate policy tools to support a strong and sustainable global recovery. A globally uneven recovery is not a resilient one. It increases inequality, exacerbates global imbalances and increases risks to the global economy,” said Finance Minister Janet L Yellen.
Explaining the decision to keep India on the list, the Ministry of Finance said that India, which meets two of the three criteria in the December 2021 and April 2021 Report, has a significant bilateral trade surplus with the US. and engage in one-sided, persistent interference with respect to the reporting period.
“India only reached the threshold of a significant bilateral trade surplus in this Report,” the Finance Ministry said, adding that India will remain on the Watch List until it meets less than two criteria for two consecutive Reports.
According to the report, India (with 569.9 billion USD) has the fourth largest source of foreign exchange after China (3.2 trillion USD), Japan (1.2 trillion USD) and Switzerland (1 trillion USD). USD).
“RBI’s foreign exchange purchases in recent years have increased reserve levels. As of December 2021, total foreign exchange reserves totaled $570 billion, equivalent to 18% of GDP and 209% of short-term external debt at remaining maturity,” it said.
In its External Sector Report 2021, the IMF assessed that India’s reserves at the time stood at 197% of the IMF’s full reserve index at the end of 2020.
Similar to many emerging market Asian peer-to-peer currencies, the rupee weakened against the US dollar throughout 2021, depreciating 1.9 percent, the Treasury Department said.
The Rupee fluctuated markedly in the first half of 2021 as the economy faced the second major COVID-19 outbreak; After that, the rupee depreciated steadily against the dollar for most of the second half of the year, it said.
“Conversely, the rupee has appreciated relatively well against the currencies of many of India’s regional trading partners – on a nominal and real basis, the rupee is up 0.8%, respectively. and 2.2% compared to 2021”. .
The Indian government said it should allow the exchange rate to move flexibly to reflect the fundamentals of the economy, limit foreign exchange intervention in cases of turbulent and restrained market conditions. accumulate even more substantial reserves.
As the economy recovers, authorities should continue to pursue structural reforms that can help boost productivity and living standards, and support a global recovery, the Treasury Department added. face and green”.
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