The United States Department of Treasury has taken off India’s name from the from its Currency Monitoring List of major trading partners. In its biannual report to Congress, the US’ Treasury Department conveyed that along with India, it had also removed Mexico, Thailand, Italy and Vietnam from the list. With this, seven economies that are now on the current monitoring list include Japan, China, Korea, Singapore, Germany, Malaysia and Taiwan.
The Currency Monitoring List closely follows the currency policies of some of the US’ major trade partners. If a country appears on the list, it is regarded as a “currency manipulator”. A ‘currency manipulator’ is a designation that the US government authorities give to countries that according to the US, engage in “unfair currency practices” for trade benefits. Thus, inclusion in the list simply means that the country is artificially lowering the value of its currency to get an advantage over others. This is because a lower currency value leads to reduced export costs from that country.
Removal of India from the list by the US’ Treasury Department can be seen as a positive news both in terms of market aspect and India’s monetary policy-making. If Indian market experts are to be believed, the development means that the Reserve Bank of India (RBI) can now take robust measures to manage the exchange rates effectively, without being tagged as a currency manipulator. This may also be a big win from a markets standpoint and also signifies the growing role of India in global growth.