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Sunday, 20 December 2020

What is Currency Manipulation Monitoring?

What is Currency Manipulation Monitoring? Why did the US put India on this list? Know everything

The United States has placed India, Taiwan and Thailand on its monitoring list of currency manipulator countries. The list includes 6 more countries including China, Germany, Italy. Why was India included in this list once again after a year and a half?

What is the meaning of currency manipulator in the end? Which countries does the US put on this list? What difference does it make to be on this list? Why was India included in this list for the second time? Let's know ... let's know ...

What does currency manipulator mean?
This is a label provided by the US Government Treasury Department. This label is used when the United States feels that a country is involved in improper currency practices that devalue the US dollar. That is to say, when a country deliberately devalues ​​its currency in some way, it benefits it compared to the currencies of other countries. De-valuing foreign currency reduces the country's export cost.

The United States has set three parameters for that. Of the three countries to which two parameters apply, the United States adds them to its monitoring list. And the countries to which all the three parameters apply are declared currency manipulators. This time there are 8 countries in the US currency manipulator monitoring list, while two countries have been declared currency manipulators by the US.

What are the parameters for a currency manipulator?

The country's bilateral trade surplus from the US is more than 20 billion in 12 months.
The current account surplus is at least 2% of the country's GDP within a year.
At least 6 times within 12 months the foreign exchange net purchase should be 2% of GDP.

What difference does this list make?
The country that is placed on this list does not make much difference at the time. But in the global financial market, sentiment towards that country could be negative.

Why was India included in this list for the second time?

The US removed India from the list in May 2019. Two of the three parameters set by the US at the time did not apply to India. At that time, India's bilateral trade surplus alone was over 20 billion.
According to a US Department of Commerce review, India's bilateral trade is still over થી 20 billion. This was 22 22 billion in the first four quarters of June 2020. So, India's foreign exchange net purchase stood at 64 64 billion, which is 2.4% of GDP. The last 12 to 10 months have been when India's foreign exchange net purchase accounted for more than 2% of GDP.
Due to these two parameters, India has once again come under the US Currency Manipulator Monitoring List.

Apart from India, which other countries are on the list?

A recent report by the US Department of the Treasury Office of International Affairs lists Taiwan and Thailand along with India. Also on the list are China, Japan, South Korea, Germany, Italy, Singapore and Malaysia. This country was already on this list.
The US put India on the list in October 2018. India was removed from the list in May 2019. After a year and a half, India has been included in this list once again.
Vietnam and Switzerland have been declared US currency manipulators. All three parameters set by the US apply to both countries.

How can a country get out of this list?
Once a country is on the monitoring list, it has to stay out of it at least twice. Then America removes that country from this list. According to the US Treasury Department, this is done so that it can be determined that the improvement in its economy that is taking place is not temporary.

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