Lok Sabha Question No. 78 (UNSTARRED), answered on 2018-02-02
Subject: Manipulation of Currency to Support Export
Ministry: FINANCE
Asked by: GAJANAN CHANDRAKANT KIRTIKAR, BIDYUT BARAN MAHATO, KUNWAR HARIBANSH SINGH, SUDHEER GUPTA, ASHOK SHANKARRAO CHAVAN, NARANBHAI KACHHADIA, T. RADHAKRISHNAN, SUNIL BALIRAM GAIKWAD, VIJAY KUMAR S.R.

## Government of India Ministry of Finance Department of Economic Affairs

## LOK SABHA UNSTARRED QUESTION No. 78

TO BE ANSWERED ON FEBRUARY 2, 2018

## MANIPULATION OF CURRENCY TO SUPPORT EXPORT

## 78. SHRI GAJANAN KIRTIKAR:

SHRI BIDYUT BARAN MAHATO:

KUNWAR HARIBANSH SINGH:

SHRI SUDHEER GUPTA:

SHRI ASHOK SHANKARRAO CHAVAN:

SHRI NARANBHAI KACHHADIYA:

SHRI T. RADHAKRISHNAN:

Dr. SUNIL BALIRAM GAIKWAD:

SHRI S. R. VIJAYAKUMAR:

Will the Minister of FINANCE be pleased to state:

- (a) whether India got biggest gains in terms of percentage among Asian emerging markets in the foreign exchange reserves last year;
- (b) if so, the details thereof and the factors favourable for such increase;
- (c) whether the United States (US) has accused India that it has manipulated its currency to support exports and if so, the details thereof;
- (d) whether India has taken up the matter with US authorities in this regard;
- (e) if so, the details thereof and the outcome thereto; and
- (f)  the steps taken by the Reserve Bank of India to maintain stability of rupee against foreign currencies?

## ANSWER

MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PON. RADHAKRISHNAN)

- (a)  &  (b)  As  per  the  information  available  from  International  Monetary  Fund  (IMF),  Thailand was  the  biggest  gainer  among  Asian  emerging  markets  in  terms  of  percentage  gains  in Foreign  Exchange  Reserves  (FER)  during  last  year.  The  details  of  FER  growth  of  Asian emerging markets are given in the table below:

## FER growth in Asian Emerging Markets (per cent).

|   Rank | Asian emerging markets   |   percentage growth in Nov 2017 over Dec 2016 |
|--------|--------------------------|-----------------------------------------------|
|      1 | Thailand                 |                                          18.2 |
|      2 | India                    |                                          11.8 |
|      3 | Indonesia                |                                           8.3 |
|      4 | Malaysia                 |                                           9.1 |
|      5 | South Korea              |                                           4.4 |
|      6 | China                    |                                           3.2 |
|      7 | Philippines              |                                          -0.4 |

There are various factors like increased Portfolio investment by Foreign Institutional Investors (FIIs),  remittances by overseas Indians and valuation effect of exchange rate, etc. that have resulted in the increase of  FER.

(c) to (e) The United States has not accused India of currency manipulation. However, the US Department of the Treasury in its October 2017 report on 'Foreign Exchange Policies of Major Trading Partners of the United States' stated that 'Over the first half of 2017, there has been a notable increase in the scale and persistence of India's net foreign exchange purchases, which have risen to around $42 billion  (1.8 per  cent  of  GDP) over  the four  quarters  through  June 2017. India has a significant bilateral goods trade surplus with the United States, totaling $23 billion  over  the  four  quarters  through  June  2017.  Treasury  will  be  closely  monitoring  India's foreign exchange and macroeconomic policies.'

(f) The exchange rate of the rupee is market determined. The Reserve Bank of India (RBI), however,  intervenes  in  the  domestic  foreign  exchange  market  to  manage  volatility  and maintain orderly conditions. RBI continues to monitor the situation on exchange rate front and takes  appropriate  steps  to  bring  stability  in  case  of  unwarranted  increase  in  forex  market volatility.

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