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The IMF and World Bank’s first annual meetings in Africa since 1973 were expected to give a spending boost to Morocco’s fourth-largest city and one of its top tourist destinations. Image Credit: Bloomberg

Marrakech: The US practice of putting emerging markets countries on a watchlist as potential currency manipulators should be reviewed, said India’s central bank governor, who defended the need to buttress their economies from market swings.

“There has to be a two-sided appreciation of the challenges” emerging markets face dealing with spillover effects of advanced economy policies, Reserve Bank of India Governor Shaktikanta Das said Thursday at the annual meetings of the International Monetary Fund and World Bank in Marrakech, Morocco.

India was most recently on the US Treasury’s watchlist as a potential currency manipulator in late 2020 and was removed two years later. In its June update, Treasury didn’t label any major trading partner as a manipulator, however seven economies remained on its monitoring list including China, Germany and Switzerland.

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India’s central bank has been one of the most active dollar buyers in the market in recent years as it seeks to build reserves to fend off any speculative attack on the currency. The RBI has added $60 billion to reserves after it fell to a two-year low of $525 billion in October last year.

The RBI Governor said India’s reserves accumulation was “as an insurance against spillover risks,” of advanced economy central bank policies.

“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.

The RBI does intervene in currency markets, he said, but the objective is “not to fix,” the dollar-rupee exchange rate at a particular level.