Topics Covered: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.
U.S. Treasury keeps India on currency watch list:
Context:
The U.S. Treasury has released the report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States. The April 2021 edition of the semi-annual report is the first from the Biden administration.
- The report is submitted to the U.S. Congress and reviews currency practices of the U.S.’s 20 biggest trading partners.
Three criteria are used to review partners:
- A significant (at least $20 billion) bilateral trade surplus.
- A material current account surplus.
- Persistent one-sided intervention in forex markets.
Highlights of the latest report:
- India is one of the 11 countries on the ‘Monitoring List’ with regard to their currency practices.
- India was on the list in the December 2020 report as well.
- The other 10 countries on the list with India are China, Japan, Korea, Germany, Ireland, Italy, Malaysia, Singapore, Thailand, and Mexico.
- India met two of the three criteria — the trade surplus criterion and the “persistent, one-sided intervention” criterion.
What is currency manipulation?
The US Treasury department defines currency manipulation as when countries deliberately influence the exchange rate between their currency and the US dollar to gain “unfair competitive advantage in international trade”.
InstaLinks:
Prelims Link:
- US Currency Manipulators list.
- Countries in watch list.
- Criteria.
- Implications.
- India’s position.
Sources: the Hindu.
