InvestorQ : What does it mean that the US has declared India a currency manipulator? What implications could it have?
diksha shah made post

What does it mean that the US has declared India a currency manipulator? What implications could it have?

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Dawn Cherian answered.
2 months ago
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Let me clarify that India has not be declared a Currency Manipulator by the US Treasury. India has only been put on the watch list of the government. In fact, the US Treasury Department has declared Switzerland and Vietnam as “Currency Manipulators” and put 3 countries including India on the currency watch list.

This appears to be one more last act by Trump before he officially demits office in early January. The watch list is normally reserved for countries that run trade surplus with the US. The normal accusation by the US is that these countries have been deliberating keeping their currencies weak so as to push their exports to the United States.

In the last few years, India’s trade with the US has grown to become India’s largest trade partnership in terms of trade volumes. The US has take China’s position as the top trading partner with India. The only difference is while India runs a huge trade deficit with China, it runs a huge trade surplus with India, which is the reason for this tag.

Trump had pointed that the central banks of Switzerland and Vietnam had heavily intervened in currency markets to keep their currencies weak. Of course, Switzerland has dismissed the currency manipulator charge made by the US Treasury Department. Vietnam has, however, chosen not to give any comments on the tag being assigned to them.

This list is only for countries that run trade surplus in excess of $20 billion with the US. Apart from India, Thailand and Taiwan have also been added to the list. The list has not been very effective in the past as these are just allegations and there is no concrete proof. In the past, the US has used such lists to put trade sanctions on select countries.

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