RBI For Balanced Approach And Reconsideration Of US Currency Manipulator List (Image: x.com)
The RBI Governor, Shaktikanta Das said that there was a need for a balanced approach towards the spill over effects which arises from the challenges of dealing with the policies of advanced economies. The United States, the RBI Governor said, should rethink on its currency manipulator list. He said that the US practice of keeping emerging markets on a watch as possible currency manipulators needs to be reviewed, while he also defended the necessity to support their economies from any market swings, the ET reported.
At the annual meeting of the International Monetary Fund and World Bank, held at Marrakech, Morocco, the Reserve Bank of India Governor said, “there has to be a two-sided appreciation of the challenges” that are faced by emerging markets which deals with spillover effects of advanced economy policies.
Recently, India was under the watch of US Treasury’s list as a potential currency manipulator. This was in the late 2020 and later, after two years, India was taken off the list. In its update in June, the US Treasury did not list any key trading partner as a manipulator though it still holds a list where seven countries were kept on its monitoring list. The list includes countries like China, Germany and Switzerland.
In order to ward off any speculative attack on currency, the RBI has been active in building its reserves by buying dollars in the market. A $60 billion has been added to the reserves by the RBI after a two year low in October last year to the tune of $525 billion. On India’s reserve accumulation, the RBI Governor said that, it was “as an insurance against spillover risks,” which could stem from the central bank policies of the advanced economies. He added, “India, with a huge population, and with the size of our economy, we have to be self-reliant, we have to be self-dependent, we have to have our strong reserves.”
Das said that RBI does not intervene in currency markets and does not fix the dollar-rupee exchange rate at any level. He also touched upon the future of money.
