US may remove India from currency monitoring list

Agencies
October 18, 2018

Washington, Oct 18: The US could remove India from its currency monitoring list of major trading partners, the Treasury Department has said, citing certain developments and steps being taken by New Delhi which address some of its major concerns.

India for the first time was placed by the US in its currency monitoring list of countries with potentially questionable foreign exchange policies in April along with five other countries – China, Germany, Japan, South Korea and Switzerland.

The Department of Treasury maintained the same monitoring list in its latest report released on Wednesday but said if India continues with the same practices as in the last six months, it would be removed from its next bi-annual report.

"India's circumstances have shifted markedly, as the central bank's net sales of foreign exchange over the first six months of 2018 led net purchases over the four quarters through June 2018 to fall to USD 4 billion, or 0.2 per cent of the GDP," the Treasury said in its latest semi-annual Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the US.

This represented a notable change from 2017, when purchases over the first three quarters of the year pushed net purchases of foreign exchange above two per cent of the GDP, it said.

Recent sales have come amidst a turnaround in foreign portfolio flows, as foreign investors pulled portfolio capital out of India (and many other emerging markets) over the first half of the year, it said.

The rupee depreciated by around seven per cent against the dollar and by more than four per cent on a real effective basis in the first half of 2018, the report said.

India has a significant bilateral goods trade surplus with the US, totalling USD 23 billion over the four quarters through June 2018, but India's current account is in deficit at 1.9 per cent of the GDP.

"As a result, India now only meets one of the three criteria from the 2015 Act. If this remains the case at the time of its next report, Treasury would remove India from the monitoring list," the Treasury said.

Observing that India's current account deficit widened in the four quarters through June 2018 to 1.9 per cent of the GDP, following several years of narrowing from its 2012 peak, the Treasury said the current account deficit has been driven by a large and persistent goods trade deficit, which has in turn resulted from substantial gold and petroleum imports.

The goods trade deficit has widened out in the first half to 6.4 per cent of the GDP as oil prices have risen.

The IMF projects the current account deficit to be around 2.5 per cent of the GDP over the medium term as domestic demand strengthens further and favourable growth prospects support investment.

India's goods trade surplus with the US was USD 23 billion for the four quarters through June 2018, it said, adding that India also had a small surplus in services trade with the US of USD 4 billion over the same period.

"India's exports to the US are concentrated in sectors that reflect India's global specialisation (notably pharmaceuticals and IT services), while US exports to India are dominated by key service trade categories, particularly travel and higher education," the report said.

The Treasury praised India for being "exemplary" in publishing its foreign exchange market intervention.

The Reserve Bank of India (RBI) has noted that the value of the rupee is broadly market-determined, with intervention used only during "episodes of undue volatility," it said.

According to the authorities' data, India was generally a net purchaser of foreign exchange from late 2013 to the middle of 2017, as the RBI sought to gradually build a stronger external buffer in the aftermath of the May 2013 "taper tantrum".

Purchases accelerated in the first half of 2017 amidst strong portfolio inflows to India (and many other emerging markets); as a result, cumulative net purchases of foreign exchange exceeded two per cent of the GDP over 2017, it said.

Noting that foreign exchange purchases generally declined in the second half of 2017, and the RBI shifted to selling foreign exchange in the first half of 2018, the Treasury said net purchases of foreign exchange over the past four quarters through June totalled USD 4 billion (0.2 per cent of the GDP), including activity in the forward market.

"Sales of foreign exchange in the first half of this year came in the context of foreign portfolio outflows of USD seven billion, as India experienced outflows (particularly of foreign portfolio debt) that were witnessed across many emerging markets in the second quarter," it said.

This mirrored the pattern of the last few years, in which intervention has typically tracked institutional portfolio flows. India maintains ample reserves according to the IMF metrics for reserve adequacy, particularly given that India maintains some controls on both inbound and outbound flows of private capital.

As of June 2018, foreign currency reserves stood at USD 380 billion, equal to 3.7 times gross short-term external debt, 8 months of import cover, and 14 per cent of the GDP.

"The rupee depreciated 7 per cent against the dollar in the first half of the year, while the real effective exchange rate also reversed its general uptrend from the last few years, depreciating by four per cent," it said.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
News Network
March 28,2024

fire.jpg

Mangaluru, Mar 28: A fish meal factory in the Baikampady Industrial area in Mangaluru was gutted in a fire incident on Thursday, officials said.

The factory is owned by the company 'Shihar Enterprises', they said.

According to the locals, the fire was first noticed at 4.45 am today, which was immediately reported to the fire department.

The fire engines reached the spot and tried to douse the fire, but it had already spread to other parts of the factory. After almost four hours of fire-fighting operation, the blaze was completely doused, officials.

The reason for the blaze is still being probed, the fire department officials said, adding that they suspect an electric short circuit could have triggered it.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
News Network
March 18,2024

putin.jpg

Russian President Vladimir Putin claimed a landslide victory in the just-concluded presidential polls, securing him a fifth term in power. While Putin hailed the results as an indication of "trust" and "hope" in him, critics panned the polls for its preordained nature.

As early results poured in, Putin won 87.8% of the vote, the highest-ever result in Russia's post-Soviet history, Reuters quoted Public Opinion Foundation (FOM) exit polls. The Russian Public Opinion Research Centre (VCIOM) put Putin on 87%. 

If he completes the term, the 71-year-old President will also script history as Russia's longest-serving leader for more than 200 years, overtaking Josef Stalin. 

While Communist candidate Nikolai Kharitonov finished second with just under 4%, newcomer Vladislav Davankov third, and ultra-nationalist Leonid Slutsky fourth, partial results suggested.

In his victory speech, Putin said he would prioritise resolving tasks associated with Russia's "special military operation" in Ukraine and would strengthen the Russian military. 

"We have many tasks ahead. But when we are consolidated - no matter who wants to intimidate us, suppress us - nobody has ever succeeded in history, they have not succeeded now, and they will not succeed ever in the future," said Putin. He was welcomed by his supporters to the stage with "Putin Putin" chants. He also hailed the results as an indication of "trust" and "hope" in him.

Later, while interacting with reporters, Putin also warned the West that a direct conflict between Russia and the U.S.-led NATO military alliance would mean the planet was one step away from World War Three but said hardly anyone wanted such a scenario. "It is clear to everyone, that this will be one step away from a full-scale World War Three. I think hardly anyone is interested in this," Putin told reporters after winning the biggest-ever landslide in post-Soviet Russian history.

Meanwhile, the Western world condemned the elections, stating the polls were neither free nor fair. While Germany called it a "pseudo-election" under an authoritarian ruler reliant on censorship, repression and violence, UK Foreign Secretary Lord Cameron condemned "the illegal holding of elections on Ukrainian territory".

Ukraine's President Volodymyr Zelensky said, "The Russian dictator is simulating another election".

Earlier during the elections, heeding an opposition call to protest, hundreds of  Russians crowded outside polling stations at noon Sunday, on the last day of the elections. The associates of Alexei Navalny, the critic of Putin who died earlier this month in an Arctic prison, had urged people who were unhappy with Putin or the war in Ukraine to go to the polls at noon on Sunday. Many turned up and lines outside a number of polling stations both inside Russia and at its embassies around the world appeared to swell at that time.

Among those heeding the call was Yulia Navalnaya, Navalny's widow, who joined a long line in Berlin. She later told reporters that she cast her vote and wrote her late husband's name on the ballot.  Asked whether she had a message for Putin, Navalnaya replied: "Please stop asking for messages from me or from somebody for Mr. Putin. There could be no negotiations and nothing with Mr. Putin, because he's a killer, he's a gangster."

One woman in Moscow, who said her name was Yulia, told the AP that she was voting for the first time. "Even if my vote doesn't change anything, my conscience will be clear ... for the future that I want to see for our country," she said. Like others, she didn't give her full name because of security concerns.

Another Moscow voter, who also identified himself only by his first name, Vadim, said he hoped for change, but added that "unfortunately, it's unlikely".

More acts of rebellion were reported on Saturday too. Cases were filed against at least 15 people for pouring dye in ballot boxes, started fires or lobbing Molotov cocktails at polling stations. Ella Pamfilova, the head of Russia’s CEC, said 29 polling stations across 20 regions in Russia were targeted, including eight arson attempts.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
News Network
March 28,2024

russiaattack.jpg

Russia says it is "extremely hard to believe" that Daesh could have staged the recent hugely deadly attack on a Moscow concert hall that the country's intelligence and security officials have blamed on Ukraine and its Western backers.

Four gunmen burst into the Russian capital's Crocus City Hall on Friday and began shooting at the people, who were attending an event. The Takfiri terrorist group has allegedly claimed responsibility for the massacre that killed at least 143.

Speaking on Wednesday, however, Russian foreign ministry spokeswoman Maria Zakharova cast that claim into serious doubt.

"In order to ward off suspicions from the collective West, they urgently needed to come up with something, so they resorted to ISIS (Daesh), pulled an ace out of their sleeve, and literally a few hours after the terrorist attack, the Anglo-Saxon media began disseminating precisely these versions," she said.

The chief of the Russian internal intelligence (FSB), Alexander Bortnikov has suggested that not only Ukraine, but also the United States and Britain might have been behind the shooting.

The Russian Federal Security Service has also said the gunmen planned to travel to Ukraine, where they were to be welcomed as "heroes." The FSB said Western intelligence services aided the attackers.

Russian President Vladimir Putin has also suggested that Ukraine stood to derive benefit from the attack and that Kiev might have played a role.

He has said that someone on the Ukrainian side had prepared a "window" for the gunmen to escape across the border before they were captured in western Russia on Friday night.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.