USA Removed India from its currency monitoring list

What Does It Mean, Criteria, If the US Removes India From Its Currency Monitoring List?

India Is Removed From Currency Watch List by US: After two years, the US Department of Treasury has removed India from its list of key trading partners subject to currency monitoring. Pay particular attention to the macroeconomic policies and currency practices 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 China, Japan, Korea, Germany, Malaysia, Singapore, and Taiwan as the seven economies that are now under observation in its biannual report to the US Congress.

It stated that the nations 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 accounts in a row.

The US Treasury Department examined and evaluated significant 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.

WHAT DOES IT MEAN FOR INDIA?

A nation is regarded as a "currency manipulator" if it appears on the US Currency Monitoring List. The US government designates nations that engage in "unfair currency practices" as currency manipulators "for the benefit of trade.

"This (the removal from the 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," said Vivek Iyer, partner and leader (financial services risk) at Grant Thornton Bharat. This represents India's growing contribution to the global economy and is a significant victory from the perspective of the markets."

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.

The fact that India was named a currency manipulator is good news for the country, according to Anil Kumar Bhansali, head of Treasury at Finrex Treasury Advisors. This could lead to the rupee strengthening.

WHAT IS A CURRENCY MONITORING LIST?

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.