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On this, the Government of India reacted on Tuesday and said that no logic of this is understandable.
India’s Commerce Secretary Anoop Wadhawan told reporters, “I have not understood any economic logic of this.”
He said that the Central Reserve Bank collects money according to market forces.
According to the news agency Reuters, last week, the US Finance Ministry had put 10 economies including India, Singapore, Thailand, and Mexico on the ‘watch list’.
It was said that there is a need to maintain a close watch on the currency collection and other methods of these countries.
The Commerce Secretary said that India’s trade surplus with the US (when a nation’s exports surpass its imports) increased by nearly five billion dollars in 2020-21.
The US report says that India’s bilateral trade surplus with the US was $ 24 billion in goods in 2020, with a financial surplus of $ 8 billion in services.
The report said that the Indian authority should limit foreign exchange intervention without accumulating disorganized market conditions and excess reserves.
Some economists say that America’s new move on India will prevent the central bank from making aggressive intervention in the foreign exchange market.
America has put India in this list for the second time. India was first removed from this list.
America has been included in this list of those countries which deliberately adopt ‘inappropriate currency behavior’ and devalue their currency against the dollar.
A country wants to adopt this trend so that it can artificially reduce its currency by using it to take unfair advantage from others.
The devaluation of the currency will reduce the cost of export from that country and result in an artificially reduced trade deficit.
The US puts a country on this list on various parameters. This includes parameters such as increasing the trade surplus in a ‘significant’ manner in a financial year and purchasing two percent of the country’s reserves of currency during 12 months.
India is being cited for inclusion in this watch list due to the high dollar purchases and increasing trade surplus by the Central Reserve Bank.
In the latest report, India’s trade surplus with the US has exceeded 20 billion dollars.
At the same time, according to the statistics of the central bank, by the end of 2019, India had shown a particularly rapid pace in buying foreign currency.
By June 2020, India had bought $ 64 billion of foreign exchange in four quarters, which was 2.4% of GDP.
The US State Treasury Department of International Affairs in its latest report has put India, Taiwan and Thailand on the watch list and asked them to ‘keep a close watch’ on their currency patterns and their macro-economic policies, describing them as their big trading partner.
At the same time, the name of China is once again included in this list. He has been repeatedly accused of devaluing his currency. Along with this are Japan, Korea, Germany, Italy, Singapore, Malaysia.
India was first added to this list in October 2018 but was removed from this list in May 2019.
No penalty is immediately imposed on a country as a currency manipulator, but due to this the credibility in the global financial market of a country falls.
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