• Today is: Wednesday, November 30, 2022
Economy & Business

India dropped from currency monitoring list as Yellen seeks better economic relations

The Hawk
November12/ 2022

Washington/New Delhi (The Hawk): India had satisfied the criteria for removal from the list that assesses whether nations manipulate the exchange rate between their currency and the US dollar to gain an unfair competitive advantage in international trade or to take advantage of balance of payments adjustments, according to a report the Department submitted to Congress on Thursday.

According to the study, China, Japan, Korea, Germany, Malaysia, Singapore, and Taiwan are still on the Monitoring List, but Italy, Mexico, Thailand, and Vietnam have also been crossed off.

India and the other four nations were both eligible for removal since they each met at least one of the three requirements for being removed off the list during the course of two reporting seasons.

The report's release coincided with Yellen's visit to India to deepen trade ties as the US pursues a global economic and manufacturing realignment after experiencing issues from overdependence on China, which was a coincidence as others were also dropped.

Yellen discussed the idea of "friendshoring," which involves bringing supply chains to friendly nations.

"We believe it's crucial to strengthen our commercial ties with India in a world where supply chain vulnerabilities can impose enormous costs," she said.

She stated, "India is one of our reliable trading partners.

The extent of the bilateral trade surplus with the US, the current account surplus, and continuous one-sided foreign exchange market intervention are the three criteria used to place a nation on the watch list.

Additionally, it takes monetary policy, capital controls, exchange rate trends, coverage of foreign exchange reserves, and currency changes into account.

The report highlights New Delhi's performance in the relevant categories but does not specify which criteria India met.

According to the research, at the end of June, India had foreign exchange reserves worth $526.5 billion, or 16% of its GDP.

According to the report, India continues to keep "sufficient - or more than ample - foreign currency reserves based on established adequacy metrics," just like the other nations covered by it.

According to the report, it also enjoyed a $48 billion trade surplus with the US.

According to the research, India made sure that economic policy was transparent.

One-sided currency intervention, according to the department, is defined as net purchases of foreign currency totaling at least 2% of GDP in at least eight out of the previous twelve months.

According to the report, India bought $30 billion less worth of foreign currency in the fourth quarter than it had in the third.

(Inputs from Agencies)