RBI’s dollar mopping spree could slow down as US puts India on currency watchlist

 The Print

17 December, 2020

By MANOJIT SAHA

Mumbai: The US treasury department’s move to place India under the currency manipulator watchlist is likely to create additional headwinds for the Reserve Bank of India (RBI) to shore up the country’s foreign exchange reserves, and also halt the rupee’s sharp appreciation on the back of strong foreign fund inflow.

In its report Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States, the treasury Wednesday said 10 economies — China, Japan, Korea, Germany, Italy, Singapore, Malaysia, Taiwan, Thailand and India — warrant placement on its ‘Monitoring List’, and merit close attention as these countries are suspected to be taking measures to devalue their currencies against the dollar. Moreover, it labelled Switzerland and Vietnam as currency manipulators.

The report observed that a number of countries have conducted foreign exchange market intervention in a persistent, one-sided manner that exceeds treasury criteria pursuant to the Trade Facilitation and Trade Enforcement Act of 2015.

India, the report said, along with three other countries intervened in the foreign exchange market in a sustained, asymmetric manner.

Rupee is the worst performing currency in Asia in 2020 as it depreciated 2.8 per cent against the dollar due to heavy RBI intervention amid robust inflows. The department had put New Delhi in the same list earlier in May 2018, but removed it last year.

Ref: https://theprint.in/economy/rbis-dollar-mopping-spree-could-slow-down-as-us-puts-india-on-currency-watchlist/568494/


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