Rajan, former RBI governor raise voice as to us treasury labeling Indian as currency manipulator

Indian former RBI governor currently professor at University of Chicago Booth school of Business said on the sidelines of the Barclays Asia Forum “I don’t suspect the treasury will do that but it shouldn’t even if it’s thinking of it”. Rajan said that US Treasury should not label India as “currency manipulator” as country needs to build forex reserves to protect the economy from outflows as said in business standard. The comments by Rajan in interview to CNBC after it some reports that US Treasury had said it would be closely monitoring India’s foreign exchanged and macroeconomics policies in its latest reports on its trading partner’s exchange rate policies. Though also had viewed saying India runs a current account deficit, which could get larger on rise in crude oil prices in international market, as India also need to build reserve in order to protect against outflows, as it cannot keep running to the IMF for help as large country and it is very difficult politically.

The three criteria used by treasury to determine “unfair currency practices said he put point on bilateral trade surplus with the US amounting around $20billion that  is current account around 3%  of country’s gross domestic product.

Net purchase of foreign currency amounting to 2% of economy’s GDP over 12month time while India’s trade surplus with the US stood at$23 billion in the year end at June.

Rajan defended India front by saying India exchange rate being healthy one valued and it is also overvalued “So given that it’s hard for me to say that you look at one number and then label the country as currency manipulator on that basis. I don’t suspect the treasury will do that but it should not even if it is thinking about it”, he added that we need our own macro prudential tool it only during that holding exchange rate at the grossly undervalued level and nobody could can accuse India of doing currency manipulator.

India had foreign exchange reserve of about $400 billion, the government infuses of Rs2.11 lakh crore as “good news” it is as important for banks to have lending moving forward.

However India has public sector banking system and is about 70% it important to know as it allows the take tough decision s they could not lend with limited capital. As India need reforms in over time in the banking sector as improve governance in public sector banks as in future it is important to come up with clean bank-balance sheet which in turn proves with healthier projects that are restructured for establishing stronger economic growth as per Rajan’s view being the one who completed his three year term in September last year.

With defending Indian government move on demonetization of Rs 1000 notes last year and GST which will be as positive in long run, fixing the debt will be growth indicator for India said Rajan, the country former top central banker on Thursday. Around start of this month he was said to be apt pick to head US Federal Reserve global financial magazine Barron’s said in an article as it pitched for Rajan the next chairman of the American central bank whereas President Trump is said to soon announce successor to federal bank Chair Janet Yellen whose term completes next year. However he is a star banker as someone who oversaw a sharp drop in inflation, the stabilization of a currency and a50% jump in stock prices according to article.