Currency Watch List: The US Treasury Department has removed India from its currency monitoring list of major trading partners along with Italy, Mexico, Thailand, Vietnam. India was in this list for the last two years. Under this system, a close watch is kept on the currency activities and macroeconomic policies of the major trading partners.
Steps taken during US Treasury Secretary Janet Yellen’s visit to India
US Treasury Secretary Janet Yellen held a meeting with Finance Minister Nirmala Sitharaman on Friday during her visit to India. On the same day, the Finance Department of America has taken this step. In its half-yearly report to Parliament, the Finance Department said that China, Japan, South Korea, Germany, Malaysia, Singapore and Taiwan are the seven countries that are currently on the watch list.
Why is it good news for India
For the last two years, India was in the currency monitoring list of America. America prepares this list to monitor the currency of its major partners. Under this arrangement, a close watch is kept on the currency activities and macroeconomic policies of the major trading partners. Those countries are kept in the watch list, whose foreign exchange rates are suspicious. In this way, India’s coming out of this list shows the increasing trust of America on the country, about which Janet Yellen has also said.
China currently remains in the currency monitoring list
The report states that the countries that have been removed from the list have met only one of the three criteria in two consecutive reports. The report said that China is under the close watch of the Finance Department for failing to publish its foreign exchange interventions and lack of transparency in its exchange rate mechanism. Other countries in the list are China, Japan, South Korea, Germany, Malaysia, Singapore and Taiwan.
what janet yellen said
In a statement announcing the report’s release, US Treasury Secretary Yellen said the global economy was already dealing with supply-and-demand imbalances caused by COVID-19 prior to Russia’s war against Ukraine, which has created shortages in food, fertilizer and other commodities. Energy prices have increased – further fueling global inflation and exacerbating food insecurity. Major economies facing different pressures may follow different policies accordingly, which may be reflected in currency movements. Treasury is aware that a range of approaches to global economic headwinds by developing and emerging economies may be warranted in certain circumstances.
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