This is a collection of articles archived for the excellence of their content.

1 Foreign exchange expenditure
- 1.1 2022-23
2 Increases and decreases over the years
3 Purchase of foreign exchange (by India)
- 3.1 Why the US is keeping an eye on India’s exchange rate policies
- 3.2 USA found India’s $56 billion purchase in 2017 ‘unnecessary’
  - 3.2.1 2021: US keeps India on currency manipulator list
4 US Treasury securities
- 4.1 2021 Dec
5 See also

Foreign exchange expenditure

2022-23

Mayur Shetty, May 23, 2023: The Times of India

Foreign exchange expenditure by Indian in FYs 2022, 2023
From: Mayur Shetty, May 23, 2023: The Times of India

Mumbai: The boom in overseas travel after the pandemic has led to foreign currency spends by Indians jumping $7. 5 billion to a record $27. 1 billion in FY23. Nearly 90% of the additional spend under the RBI’s liberalised remittance scheme, came from foreign travel alone.

According to RBI data, foreign currency spends were at about $19. 6 billion in FY22 and $12. 7 billion in FY21 largely due to subdued travel amid the pandemic. With the waning of the pandemic, there has been a surge in overseas travel, which jumped to $13. 7 billion in FY23, an increase of 97% from $6. 9 billion in FY22.

 Until FY18, Indians were on average spending less than a billion dollars every month. The FY23 data shows that the monthly average remittance is around $2. 2 billion — the amount has doubled in five years.  

Family maintenance and overseas education were other top outward remittance categories.

Interestingly, remittances for education dropped to $3. 4 billion in FY23 from $5. 2 billion in the previous year. In overall remittances, the spending for education accounts for about 13% of spending as against travel which makes up 50%.

The data on record spending on travel comes at a time when the government has placed checks on remittances by imposing a 20% tax collection at source (TCS) on travel expenditure.

It is expected that there could be some moderation in remittances on account of the 20% TCS. However, since the new tax rules come into effect from July, many are advancing their travel plans to the first quarter to avoid the 20% TCS. As a result, the remittance numbers for April-June 2023 might remain elevated.

The increase in foreign travel is further evidence of the ‘K’ shaped recovery where different parts of the economy show divergent performance. This is seen in a big jump in luxury spending, including high-end cars and five-star hotel bookings, even as fast-moving consumer goods (FMCG) see a slowdown.

Gifts too have a double-digit market share in total remittances. In FY23, Indians sent abroad $3 billion as gifts, an increase of 28% from $2. 3 billion in FY22.

Among other heads, deposits in foreign banks and investments in overseas equity and debt markets stood at $1 billion and $1. 3 billion in FY23, an increase of 21% and 68%, respectively, over the previous year.

Increases and decreases over the years

1950-1951 to 2013-2014: Foreign Exchange Reserves in India

Reserve Bank of India & Centre for Industrial & Economic Research (CIER); Economic Survey 2013-14 - Table 6.1(B)

Year (as at end-March)	SDRs##		Gold*		Foreign Currency Assets*		'Reserve 'Tranche Position (RTP)		Total Reserve
Year (as at end-March)	Rs. in Crore	USD Million	Rs. in Crore	USD Million	Rs. In Crore	USD Million	Rs. in Crore	USD Million	Rs. in Crore	USD Million
1950-51	-	-	118	247	911	1,914	-	-	1,029	2,161
1951-52	-	-	118	247	747	1,568	-	-	865	1,815
1952-53	-	-	118	247	763	1,603	-	-	881	1,850
1953-54	-	-	118	247	792	1,664	-	-	910	1,911
1954-55	-	-	118	247	774	1,626	-	-	892	1,873
1955-56	-	-	118	247	785	1,648	-	-	903	1,895
1956-57	-	-	118	247	563	1,184	-	-	681	1,431
1957-58	-	-	118	247	303	637	-	-	421	884
1958-59	-	-	118	247	261	548	-	-	379	795
1959-60	-	-	118	247	245	515	-	-	363	762
1960-61	-	-	118	247	186	390	-	-	304	637
1961-62	-	-	118	247	180	377	-	-	298	624
1962-63	-	-	118	247	177	372	-	-	295	619
1963-64	-	-	118	247	188	395	-	-	306	642
1964-65	-	-	134	281	116	243	-	-	250	524
1965-66	-	-	116	243	182	383	-	-	298	626
1966-67	-	-	183	243	296	395	-	-	479	638
1967-68	-	-	183	243	356	475	-	-	539	718
1968-69	-	-	183	243	394	526	-	-	577	769
1969-70	92	123	183	243	546	728	-	-	821	1,094
1970-71	112	148	183	243	438	584	-	-	733	975
1971-72	194	269	183	264	480	661	-	-	857	1,194
1972-73	226	297	183	293	479	629	-	-	888	1,219
1973-74	230	296	183	293	581	736	-	-	994	1,325
1974-75	229	293	183	304	610	782	-	-	1,022	1,379
1975-76	211	234	183	281	1,492	1,657	-	-	1,886	2,172
1976-77	192	217	188	290	2,863	3,240	-	-	3,243	3,747
1977-78	170	200	193	319	4,500	5,305	-	-	4,863	5,824
1978-79	381	470	220	377	5,220	6,421	-	-	5,821	7,268
1979-80	545	662	225	375	5,164	6,324	-	-	5,934	7,361
1980-81	497	603	226	370	4,822	5,850	-	-	5,545	6,823
1981-82	444	473	226	335	3,355	3,582	-	-	4,025	4,390
1982-83	291	291	226	324	4,265	4,281	-	-	4,782	4,896
1983-84	248	230	226	320	5,498	5,099	-	-	5,972	5,649
1984-85	181	145	246	325	6,817	5,482	-	-	7,243	5,952
1985-86	161	131	274	417	7,384	5,972	-	-	7,819	6,520
1986-87	232	179	274	471	7,645	5,924	-	-	8,151	6,574
1987-88	125	97	274	508	7,287	5,618	-	-	7,686	6,223
1988-89	161	103	274	473	6,605	4,226	-	-	7,040	4,802
1989-90	184	107	281	487	5,787	3,368	-	-	6,252	3,962
1990-91	200	102	6,828	3,496	4,388	2,236	-	-	11,416	5,834
1991-92	233	90	9,039	3,499	14,578	5,631	-	-	23,850	9,220
1992-93	55	18	10,549	3,380	20,140	6,434	-	-	30,744	9,832
1993-94	339	108	12,794	4,078	47,287	15,068	-	-	60,420	19,254
1994-95	23	7	13,752	4,370	66,005	20,809	-	-	79,780	25,186
1995-96	280	82	15,658	4,561	58,446	17,044	-	-	74,384	21,687
1996-97	7	2	14,557	4,054	80,368	22,367	-	-	94,932	26,423
1997-98	4	1	13,394	3,391	102,507	25,975	-	-	115,905	29,367
1998-99	34	8	12,559	2,960	125,412	29,522	-	-	138,005	32,490
1999-00	16	4	12,973	2,974	152,924	35,058	-	-	165,913	38,036
2000-01	11	2	12,711	2,725	184,482	39,554	-	-	197,204	42,281
2001-02	50	10	14,868	3,047	249,118	51,049	-	-	264,036	54,106
2002-03	19	4	16,785	3,534	341,476	71,890	3,190	672	361,470	76,100
2003-04	10	2	18,216	4,198	466,215	107,448	5,688	1,311	490,129	112,959
2004-05	20	5	19,686	4,500	593,121	135,571	6,289	1,438	619,116	141,514
2005-06	12	3	25,674	5,755	647,327	145,108	3,374	756	676,387	151,622
2006-07	8	2	29,573	6,784	836,597	191,924	2,044	469	868,222	199,179
2007-08	74	18	40,124	10,039	1,196,023	299,230	1,744	436	1,237,965	309,723
2008-09	6	1	48,793	9,577	1,230,066	241,426	5,000	981	1,283,865	251,985
2009-10	22,596	5,006	81,188	17,986	1,149,650	254,685	6,231	1,380	1,259,665	279,057
2010-11	20,401	4,569	102,572	22,972	1,224,883	274,330	13,158	2,947	1,361,013	304,818
2011-12	22,866	4,469	138,250	27,023	1,330,511	260,069	14,511	2,836	1,506,139	294,397
2012-13	23,538	4,328	139,737	25,692	1,412,631	259,726	12,513	2,301	1,588,418	292,047
2013-14	26,826	4,464	129,616	21,567	1,660,914	276,359	11,019	1,834	1,828,375	304,224

1960-2018

July 23, 2019: The Times of India

India’s foreign exchange reserves, 1960-2018
From: July 23, 2019: The Times of India

India’s foreign reserve is now far bigger than Pakistan’s GDP

The Indian economy has come a long way from the balance of payment crisis that led to economic liberalisation in 1991. Starting 1987, India’s already meagre forex reserve steadily reduced from $11.5 billion to just $5.6 billion in 1990. Three decades later, the country has a healthy forex reserve of about $400 billion — about $100 billion more than Pakistan’s GDP in 2018.

2009-19

India’s Foreign exchange_reserves: 2009-19
From: Dec 21, 2019 Times of India

See graphic:

India’s Foreign exchange_reserves: 2009-19

2011, Nov to 2018, Oct

October 23, 2018: The Times of India

India’s Foreign exchange reserves, 2011, Nov to 2018, Oct 12
From: October 23, 2018: The Times of India

The value of the Indian rupee, in US dollars, 2011 Jan to 2018, Oct 12
From: October 23, 2018: The Times of India

India’s forex reserves record biggest weekly fall since 2011

India’s foreign exchange reserves dropped by $5.1 billion to $394 billion in the seven days ended October 12, 2018, the biggest weekly decline since November 2011, as the RBI sold dollars to prop up Asia’s worst-performing currency. The rupee has declined for six straight months in a row, its longest losing streak since 2002.

RUPEE HAS DIVED 16% SINCE JAN

The rupee touched a record low of 74.39 on October 9, with a 16% plunge since Jan 1 this year, as rising oil prices fuelled concerns about a widening current account deficit & inflation amid a rout in emerging markets. On Monday, it closed at 73.56 against the dollar.

2012-16: India's foreign exchange reserves

India’s foreign exchange reserves, 2012-16, and comparison with Brazil, Russia, China, South Africa, South Korea and Thailand ; Graphic courtesy: The Times of India, April 23, 2016

See graphic:

India’s foreign exchange reserves, 2012-16, and comparison with Brazil, Russia, China, South Africa, South Korea and Thailand

2016, Aug: $365.5bn: the then record

Aug 06 2016 : PTI Forex kitty at all-time high of $365.5bn

Country's foreign exchange reserves rose by $2.8 billion to reach a life-time high of $365.5 billion in the week to July 29, helped by rise in foreign currency assets, the Reserve Bank said. In the previous week, the reserves had dropped by $664 million to $362.7 billion.

Foreign currency assets (FCAs), a major component of the overall reserves, rose $2.8 billion to $341.04 billion in the reporting week, RBI data showed. FCAs, expressed in dollar terms, include the effect of appreciationdepreciation of non-US currencies such as euro, pound and yen held in the reserves.

Gold reserves remained unchanged at $20.6 billion.

The country's special drawing rights with International Monetary Fund increased by $8.5 million to $1.5 billion while the reserve position rose by $13.6 million to $2.4 billion, RBI said.

2017: $400bn mark touched for first time

Forex kitty hits $400bn for first time, Sep 16 2017: The Times of India

India's forex reserves, June 7, 2002-September 8, 2017; Forex reserves, India and the world; Forex kitty hits $400bn for first time, Sep 16 2017: The Times of India

India's forex reserves crossed the $400-billion mark for the first time on Sep 15, 2017. The latest $100 billion has been added to the reserves in three and a half years after they crossed the $300-billion level on April 2014. At current level, the reserves are enough to fund more than a year of imports. In nominal terms, foreign exchange reserves have increased by $6.6 billion during the first quarter. The reserves have risen by $30 billion since Urjit Patel took charge as RBI governor in September 2016.

An increase in these reserves provides the RBI with ammunition to tackle volatility in the forex market. The forex reserves are built up by the central bank by purchasing dollars from banks. According to RBI data, the reserves -which comprise foreign currency assets (FCAs), gold and special drawing rights with the International Monetary Fund -stood at $400.7 as on September 8.

The highest contribution to the reserves has been from foreign portfolio investors.During the April-September quarter, foreign direct investment surged by $7.2 billion in the reporting period from $3.9 billion in the same period last year. Foreign institutional investment flows increased by $11.9 billion in the first quarter from $1.2 billion in the same period last year.

The central bank's buildup of reserves comes ahead of the US Federal Reserve exiting its stimulus -a move which is expected to result in funds moving back into US dollar assets. Accretion to reserves are expected to slow down with a widening of the current account deficit (CAD) and rising crude oil prices. Foreign institutional investors have pulled out $810 million from the equity market in September on the back of $1.7 billion in August.

2018, April 6: $424.9bn

Forex reserves at record high of $424.9bn, April 14, 2018: The Times of India

The country’s foreign exchange reserves rose by $503.6 million to touch a lifetime high of $424.9 billion in the week to April 6, aided by increase in foreign currency assets, the Reserve Bank said. In the previous week, the reserves had surged by $1.8 billion to $424.4 billion.

It had crossed the $400-billion mark for the first time in the week to September 8, 2017, but has since been fluctuating. In the reporting week, the foreign currency assets, a major component of the overall reserves, rose by $657.7 million to $399.8 billion.

Expressed in the US dollar terms, the foreign currency assets include the effect of appreciation or depreciation of the non-US currencies such as the euro, the pound and the yen held in the reserves.

2018, April: $426.08 bn/ 2019, June: $426.4 bn

June 29, 2019: The Times of India

India's foreign exchange reserves, April 13, 2018- June 21, 2019
From: June 29, 2019: The Times of India

A dovish US Federal Reserve and weaker dollar has helped boost India’s foreign exchange reserves to a record high of $426.4 billion for the week ended June 21. The previous record was achieved in April 2018 when forex reserves had hit $426.08 billion.

The US Fed has been helping channel foreign funds into the Indian capital markets. The first six months of the fiscal have seen nearly $13-billion investment by foreign portfolio investors in debt and equity. RBI data shows that the total currency assets — the largest component of forex reserves — stood at $398.6 billion as on June 21, an increase of $320 million from the previous week.

The RBI also released on Friday the sources of variation in the foreign exchange reserve during FY19.

On a balance of payments basis (excluding valuation effects of RBI’s non-dollar foreign currency investment), the forex reserves decreased by $3.3 billion during 2018-19 as against an increase of $43.6 billion during 2017-18.

2019, Oct: $438bn

Oct 12, 2019: The Times of India

The country’s foreign exchange reserves surged by $4.2 billion to touch a record high of $437.8 billion in the week to October 4, according to the RBI. In the previous week, the reserves had surged by $5 billion to $433.6 billion. The increase in reserves in the reporting week was on account of rise in foreign currency assets (FCA), a major component of the overall reserves.

FCA increased by nearly $4 billion to $405.6 billion in the week ended October 4, the RBI said.

During the week, gold reserves increased $232 million to $27.2 billion. The special drawing rights with the International Monetary Fund was up by $1 million to $1.43 billion during the week. AGENCIES

2019, Dec: a record $451bn

Dec 6, 2019 Times of India

India’s Foreign exchange reserves, 2001-19
From: Dec 6, 2019 Times of India

Foreign exchange reserves continued the upward journey, surging to a new high of $451.7 billion as of December 3, RBI governor Shaktikanta Das said on Thursday. Since the beginning of the current fiscal, the forex kitty has gained by $38.8 billion as of December 3, the largest in recent years, the governor added.

The total reserves had risen by $347 million to $448.6 billion in the week to November 22, the last reported number by the RBI. The reserves have been surging to new highs every week for the last few months and this is the first time that they have crossed the $450 billion mark.

In the last 12 months several of the emerging market currencies had weakened against the dollar. Among the currencies that weakened the rupee has been among the better-performing currencies depreciating only 1.21% since December 2018.

According to a report by Care Ratings, the $56 billion addition to reserves up to December is a reflection of overall strong fundamentals. “This has been aided by a lower trade deficit, stronger capital flows through FPI and FDI and larger recourse taken to external commercial borrowings by companies due to favourable interest rate regime and stable rupee,” said Madan Sabnavis, chief economist, Care Ratings.

2020, Feb: $476bn

February 22, 2020: The Times of India

Forex kitty at record $476bn

Mumbai:

The country’s foreign exchange reserves swelled by over $3 billion to a lifetime high of $476 billion in the week to February 14, mainly due to a rise in foreign currency assets, according to the RBI data.

In the previous week, the foreign exchange reserves had increased by $1.7 billion to $473 billion.

Foreign currency assets, a major component of the overall reserves, rose by $2.8 billion to $442 billion in the reporting week. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.

Gold reserves rose by $344 million to $29 billion. AGENCIES

2020, June: $501.7 billion

Mayur Shetty, June 13, 2020: The Times of India

Foreign exchange reserves in India, vis-à-vis other Asian economies, Russia, as in 2020 June.
From: Mayur Shetty, June 13, 2020: The Times of India

The country’s forex reserves rose by $8.2 billion during the week ended June 5 to cross the half-a-trillion-dollar mark for the first time. Forex reserves rose to $501.7 billion from $493.5 billion a week earlier. The increase was due to an $8.4-billion jump in foreign currency assets to $463 billion. Of the other components of the reserves, the value of gold declined by $329 million to $3.2 billion, and reserve position in the International Monetary Fund rose by $832 million to $4.2 billion.

Bankers attributed the increase in reserves to dollar inflows arising out of deleveraging by Indian corporates. Reliance Industries has been selling large chunks of its holding in Jio Platforms to global investors and has received a commitment of Rs 97,885 crore. Bharati Telecom too raised $1 billion selling stake through a block deal. GSK sold $3.3 billion in Unilever. Bankers say that large deals, even the ones in local markets, end up drawing foreign investor interest.

“The RBI has been buying dollars since governor Shaktikanta Das took charge in 2018. With forex reserves, the more you have, the less the need to sell. The forex market knows that the RBI can easily sell $50 billion to ward off speculative attacks,” said Bank of America Securities India economist Indranil Sen Gupta. He added that as a result, forex markets have avoided testing the rupee even as other currencies like Brazil, South Africa, Turkey, and Indonesia have come under pressure.

But banks say that high reserves does not mean that all is well on the external front. “The dollar bond yield on Indian credit is still higher than pre-Covid level. Yields have come down of late because of easing dollar liquidity, but they are still away from pre-Covid levels. The reason for the underperfor mance is how the macros are stacking up, plus uncertainty in respect of the infection and associated costs,” said DBS head (treasury) Ashhish Vaidya. “The positive is that there is a larger coverage of imports, which makes India less vulnerable. The corporate deleveraging also reduces the overall risk in the corporate sector,” said Vaidya.

Gupta said the collapse in oil prices has helped offset the outflows in foreign portfolios. India is the only country among the top five — in terms of forex reserves — to have a current account deficit. What this means is that unlike others where the reserves are an outcome of intervention aimed at preventing currency appreciation, India builds its reserves since a large part of the foreign inflows are liabilities that have to be repaid at some point.

2021, June: $605 billion

June 12, 2021: The Times of India

India’s Forex reserves, 1991-21
India’s rank in the world, 2021 June
From: June 12, 2021: The Times of India

The country’s forex reserves crossed the $600-billion mark for the first time on the back of continued foreign investment flow into the capital markets. According to the RBI, forex reserves increased by $6.8 billion in the week ended June 4 to $605 billion.

The current level of forex reserves are enough to cover nearly 16 months of imports.

India is now less than $200 million behind Russia, which has an almost identical level of reserves. The pileup of foreign exchange reserves is an outcome of the RBI’s strategy of buying dollars when there is a sudden spurt of inflows which causes volatility in the forex markets. In FY20, the RBI added over $100 billion to the reserves. It has also sold dollars when the rupee came under pressure. In February and March, the central bank had depleted its stockpile by almost $10 billion by selling dollars.

Foreign fund buying of shares and debt in India also added to the reserves. According to the data from CDSL, in FY21, net inflows of about $37 billion came in through these routes and while another $400 million net flows were added to it.

According to a report by Brickworks Ratings, the exchange rate volatility demands more forex interventions by the RBI. Hence, the accumulation of forex reserves helps the RBI to maintain the exchange rate at a comfortable level. The report points out that doubts over India’s economic recovery led to significant capital outflows in April and May. The RBI’s purchase of dollars also has a corollary impact on rupee liquidity. Every $1 billion that the RBI purchases results in around Rs 7,300 crore of rupee funds being released.

2021, September, $642.5 bn, lifetime high, then decline

Dec 25, 2021: The Times of India

The country’s foreign exchange reserves declined by $160 million to $635.7 billion in the week to December 17, RBI data showed. In the previous week ended December 10, the reserves had decreased by $77 million to $635.8 billion. It touched a lifetime high of $642.5 billion in the week ended September 3.

2021- 23

April 6, 2023: The Times of India

India’s foreign exchange reserves 2021- 23
From: April 6, 2023: The Times of India

Mumbai : The country’s foreign exchange reserves have again crossed the $600-billion mark with the exchange rate stabilising and record remittance flows from non-residents, which hit $107 billion in FY23. The increase in reserves is partly because of dollar and gold purchases by the RBI and partly due to the increase in the value of nondollar assets.

Reserves had crossed the $600-billion mark for the first time in June 2021 and touched a high of $642 billion in September 2021 before slipping below that level in May 2022 when the rupee came under pressure following the Ukraine invasion. RBI governor Shaktikanta Das said that the country’s current account situation has improved to 2. 2% in Q4 from 3. 7% in Q2 because of a lower merchandise trade deficit and robust growth in services exports. “Foreign exchange reserves have rebounded from $524. 5 billion on October 21, 2022, and now stand in excess of $600 billion, taking into account our forward assets,” said Das.  India’s services exports continued to grow at a healthy pace in the first two months of 2023.

2024 Mar: $642.5bn

Forex kitty hits record $642.5bn, Re at new low

Reserves Gain, Re Weakens Because Of RBI’s Move To Absorb $5Bn As Part Of Forex Mgmt: Bankers ________________________________________

TIMES NEWS NETWORK 23 Mar 2024

Mumbai : India’s foreign exchange reserves have surged to a new peak, reaching $642.49 billion as of March 15, 2024. The milestone was achieved even as the rupee closed at a new low of 83.43 against the dollar — 28 paise lower than its previous close.

Purchase of foreign exchange (by India)

Why the US is keeping an eye on India’s exchange rate policies

Source: US Treasury, all figures are for past four quarters, April 23, 2018: The Times of India

The trade gap between the USA and a) China, and b) India 2007-2016
From: Source: US Treasury, all figures are for past four quarters, April 23, 2018: The Times of India

Three criteria that, in the US view, make a country a currency manipulator
From: Source: US Treasury, all figures are for past four quarters, April 23, 2018: The Times of India

Why the US is keeping an eye on India’s exchange rate policies

Washington, DC, has placed New Delhi on its currency monitoring list — a group of nations the US believes could be manipulating exchange rates to gain an edge over it in trade. A look at how countries can find themselves on the watch list

What is the US’s currency watch list, in which India was recently included?

The American government’s treasury department maintains a monitoring list of exchange rate policies of their country’s big trading partners that fall short of meeting certain criteria laid down by their Trade Facilitation and Trade Enforcement Act of 2015, which came into force in 2016. This act requires it’s treasury to submit a biannual report on the macroeconomic and currency exchange rate policies of its top trading partners to the country’s parliament. In the recent report the treasury put India in the monitoring list. Apart from India, the recent monitoring list also includes China, Japan, South Korea, Germany and Switzerland.

What are the criteria?

The 2015 act has specified three criteria that have to be fulfilled simultaneously to identify currency manipulator countries among the US’s large trading partners. Firstly, there has to be more than $20 billion bilateral trade surplus with the US (the country’s exports to the US has to be at least $20 billion more than its imports). Secondly, the current account surplus (trade surplus, net income from foreign investment and net cash transfers) has to be at least 3% of its GDP. The last criteria states that a country’s net purchases of foreign currency conducted over a 12-month period are at least 2% of its GDP. Any country that fulfils at least two of these three criteria are put in the monitoring list. In India’s case, the first and third criteria are fulfilled. Once included in the list the country will remain there for at least two consecutive reports.

What role does exchange rate play in trade gap? What if a country fulfils all three criteria?

In this context currency manipulation typically means a country is artificially keeping its currency’s exchange rate lower when compared to the American dollar. A lower exchange rate will mean its products will become cheaper while American exports to the country will become expensive, which will further increase the trade gap and harm American companies. There is no immediate consequence even if a country is declared a currency manipulator. Once a country fulfils every criteria, the US treasury is supposed to resolve the problem through oneyear negotiation. If the negotiations fail then the US government could take retaliatory steps that include sanctions and involving the IMF.

Has the US ever declared any of its trading partners a currency manipulator?

Prior to the 2015 Act, currency manipulators were identified by the conditions of Omnibus Foreign Trade and Competitiveness Act of 1988. In 1988, US designated South Korea and Taiwan currency manipulators. The declaration initiated bilateral negotiations, after which both agreed to reform their exchange rate management, let their currency appreciate and got their names removed from the list. From 1992-1994 ,China was labelled a manipulator. The US agreed to resolve its dispute through WTO in 1994 and China was removed from the list. Since 1994 no country has been declared currency manipulator.

USA found India’s $56 billion purchase in 2017 ‘unnecessary’

April 15, 2018: The Times of India

The US has added India to the currency practices and macroeconomic policies monitoring list, saying New Delhi increased its purchase of foreign exchange over the first three quarters of 2017 which does not appear necessary. India is the sixth addition to the watch list which comprises China, Japan, South Korea, Germany and Switzerland. “India increased its purchase of foreign exchange over the first three quarters of 2017. Despite a sharp drop-off in purchase in the fourth quarter, net annual purchase of foreign exchange reached $56 billion in 2017, equivalent to 2.2% of the GDP,” the US department of the treasury said. The pick-up in purchases came amidst relatively strong foreign inflows it said. “Given that Indian foreign exchange reserves are ample by common metrics, and that India maintains some controls on inbound and outbound flows of private capital, further reserve accumulation does not appear necessary,” it said.

2021: US keeps India on currency manipulator list

April 20, 2021: The Times of India

The US treasury department has retained India in the currency manipulator watchlist in its semi-annual report submitted to Congress, citing dollar purchases by RBI of close to 5% of GDP due to huge capital inflows, which is higher than its threshold of 2% of GDP.

US Treasury securities

2021 Dec

According to data released by the US government, of the $7. 7 trillion of treasuries that are held internationally [presumably as in early 2022] , the bulk of $1. 3 trillion is held by Japan followed by China ($1 trillion) and the UK ($647 billion). India, although being among the top five in terms of foreign exchange reserves, has only $199 billion worth of treasuries. This is down nearly 10% from a high of $220 billion in June 2021.

Foreign exchange reserves, expenditure: India

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