1. Covid-19 cases on January 31: India reports 80 new, just 6 active cases 2. IMF projects Indian economy to grow 6.1% in 2023, global growth to dip to 2.9% 3. Delhi CM Arvind Kejriwal receives death threat, accused nabbed

US Treasury removes India from its Currency Monitoring List

rupees-and-dollar

The US Department of Treasury has removed India, along with Italy, Mexico, Vietnam, and Thailand, from its currency monitoring list.

According to the Department of Treasury’s biannual report to Congress, China, Japan, Korea, Germany, Malaysia, Singapore, and Taiwan are currently on the Monitoring List.

The Treasury has created a list of “major trading partners who merit close attention to their currency practises and macroeconomic policies.”

The announcement came on the same day that Treasury Secretary Janet Yellen visited India and met with Finance Minister Nirmala Sitharaman.

According to the report, an economy that meets two of the three criteria in the 2015 Act is placed on the Monitoring List.

“Once on the Monitoring List, an economy will remain on it for at least two consecutive Reports to help ensure that any improvement in performance versus the criteria is sustainable and not due to temporary factors,” according to the report.

As an additional measure, Treasury will add and keep on the Monitoring List any major US trading partner that accounts for a large and disproportionate share of the overall US trade deficit, even if that economy has failed to meet two of the three criteria outlined in the 2015 Act.

“China, Japan, Korea, Germany, Malaysia, Singapore, and Taiwan are on the Monitoring List in this report.” Italy, India, Mexico, Thailand, and Vietnam were removed from the Monitoring List in this Report after meeting only one of three criteria for two consecutive reports,” the Treasury said.

It stated that China’s failure to publish foreign exchange intervention and broader lack of transparency around key features of its exchange rate mechanism make it an outlier among major economies and warrants Treasury’s close monitoring.

The US Treasury Department places a trading partner on the watchlist if that country intervened in the currency market for more than 2% of its GDP in a 12-month period, had a current account surplus of 2% of GDP, and a trade surplus with the US.

In the report, the Treasury assessed the 20 largest US trading partners against the thresholds established in the 2015 Act for the three criteria.

According to the report, the US Treasury continues to closely monitor US trading partners’ foreign exchange and macroeconomic policies in accordance with the requirements of both the 1988 Act and the 2015 Act, as well as to review the appropriate metrics for assessing how policies contribute to currency misalignments and global imbalances.

It also stated that the US administration “has strongly advocated for our major trading partners to carefully calibrate policy tools to support a strong and sustainable global recovery.”

The Treasury also reiterated the importance of all economies publishing data on external balances, foreign exchange reserves, and intervention in a timely and transparent manner.

The US 1988 Act requires the Secretary of the Treasury to submit semi-annual reports to Congress on international economic and exchange rate policy.

The Secretary must “consider whether countries manipulate the rate of exchange between their currency and the United States dollar for the purposes of preventing effective balance of payments adjustment or gaining an unfair competitive advantage in international trade,” according to Section 3004 of the United States Act of 1988.

The report examined changes in international economic and exchange rate policies over the four quarters leading up to June 2022.

Sections 3001-3006 of the Omnibus Trade and Competitiveness Act of 1988 (1988 Act) (codified at 22 U.S.C. SSSS 5301-5306) and Sections 701 and 702 of the Trade Facilitation and Trade Enforcement Act of 2015 guided the report’s analysis (2015 Act).

According to the report, “The Administration strongly opposes attempts by the United States’ trading partners to artificially manipulate currency values in order to gain an unfair advantage over American workers. Treasury continues to press other economies to keep the exchange rate commitments made in the G-20, G-7, and IMF.”

It stated that all G-7 members have agreed to use market-determined exchange rates.

According to the report, “All G-20 members have agreed that strong fundamentals and sound policies are critical to the stability of the international monetary system, and that our exchange rates should not be targeted for competitive reasons. All IMF members have agreed to refrain from manipulating their exchange rates in order to gain an unfair competitive advantage over other members”.

Dhanshree Badhe

Dhanshree Badhe

All Posts

Related Post

Tata Sons win Air India bid: Report

October 1st, 2021 | THE FREE MEDIA

Tata Sons Pvt. is set to take over ailing Air India Ltd. again, over half a century after the country’s biggest cong...

No fuel, Bihar excise department stops raids

August 25th, 2021 | THE FREE MEDIA

The excise and taxation department in Supaul district of Bihar is unable to conduct raids to implement the liquor ban for ...

RBI’s new rules for debit, credit cards with tokeniz...

October 1st, 2022 | THE FREE MEDIA

As of September 30, 2022, the Reserve Bank of India (RBI) has mandated that all credit and debit card data used in online,...