The long-running Punjab National Bank (PNB) scam, which began in 2011, unraveled when bank officials demanded full margin money for issuing new Letters of Undertaking (LOUs). This raised suspicions, leading to an investigation after companies linked to Mehul Choksi and his nephew Nirav Modi admitted to securing LOUs without collateral. On Saturday, Belgian police detained Choksi following an extradition request from India’s Central Bureau of Investigation (CBI) and Enforcement Directorate (ED), according to PTI.

Choksi, a key figure in the Rs 13,000 crore PNB loan fraud, has been evading authorities for seven years. He gained Antigua citizenship in 2019 and recently traveled to Belgium for medical treatment. His lawyer, Vijay Agarwal, confirmed the arrest, stating that Mehul Choksi is battling cancer and is “extremely unwell.” Agarwal plans to appeal the detention, arguing that Choksi is not a flight risk and should be allowed to fight the extradition while receiving treatment, rather than remaining in custody.

The scam involved fraudulent LOUs issued in violation of Reserve Bank of India guidelines, enabling shell companies to secure overseas credit for Choksi and Modi’s diamond businesses. Choksi, who transformed his family’s diamond trade into a well-known brand with Gitanjali Gems, faces multiple charges alongside Modi. In 2018, a case was filed against him, followed by chargesheets. By 2022, five additional criminal cases accused Choksi and others of defrauding banks and financial institutions. The ED has also seized assets worth Rs 2,500 crore as part of its probe.

Meanwhile, Nirav Modi, Choksi’s co-accused, has been imprisoned in the UK since 2019, with repeated bail denials. India continues to press for Modi’s extradition, raising the issue at the highest levels with UK authorities.

Choksi’s arrest marks a significant step in the PNB fraud investigation, bringing renewed focus to one of India’s largest banking scandals.

But yes, this could hurt. Despite Trump, China also doesn’t enjoy the trust that the US enjoys — which Trump might be destroying.

Published on April 13, 2025 And the dollar remained invincible. That’s the point to grasp.To fix the European problem Richard Nixon, a Republican president, went off the gold standard in 1971. By the mid-1970s Europe had lost its advantage which it still has not recovered.The only difference is that it was Europe and Japan which were the villains then and it’s China that’s the villain now. Europe exported more to the US between 1950 and 1970 than it imported — it still does — and found itself with a massive cache of dollars, called Eurodollars. Japan between 1970 and 1990 did the same and also accumulated huge reserves.Even in the 1970s, after America had refused to honour its pledge to give a troy ounce of gold for , there had been the same squeals of indignation and forecasts of apocalypse. All that happened was volatility in the financial markets and petrodollars replaced the Eurodollars. That’s when the Middle East became rich.

All things considered China doesn’t have the ‘comprehensive power’ depth that’s needed to take on the US. I think the deal Trump will offer is that the Pacific is yours but that’s all you get. Agree, and I will reduce tariffs to 10 per cent.Donald Trump’s trade policy has drawn two types of comments. One deserves to be rejected and the other requires closer scrutiny.In their place came China as the leading exporter to the US. Like Europe between 1950-70 and Japan between 1955-85 it, too, was facilitated by the US. So the idea that Trump doesn’t want the dollar to be the reserve currency by engineering a trade surplus for America is completely ludicrous. It could and has depreciated. But that’s temporary. By 1992, just as the the Europeans had bitten the dust by 1980, the Japanese economy also went into a stagnant phase. Neither Europe nor Japan have recovered even now.

The comments to be rejected are politically inspired, that he is trying to manipulate the financial markets so that someone can make money.

This is plain silly. His close friend Elon Musk has actually lost more than billion.International economics bloomed. Many papers and books were written. Some economists even won the ‘Nobel’ prize. But when all the commercial and academic dust had settled down, there the dollar was, as the safe haven currency of the world.

The other set of comments is about economics, that Trump is trying to devalue the dollar so that American exports become competitive. The simple answer to this is that a global reserve currency is, by definition, one that requires trade deficits.In 1985, Ronald Reagan, another Republican president, forced two things on Japan. He ‘persuaded’ the Japanese to accept voluntary export restraints to limit the numbers of Japanese food entering the US.

The other thing was known as the Plaza Accord that ‘persuaded’ Japan to revalue its currency vis-a-vis the dollar.We in India, meanwhile, should be wondering, like Kalia in Sholay, what’s going to be our fate. “Ab tera kya hoga, Kaliye”.In the end, the point is this: if you had to choose between America and China, who would you choose? And that’s the trillion dollar question: the Communist Party of China or America?Public memory may be short but I had thought economists would have somewhat longer memories. But apparently not, because they have forgotten what happened in the four decades from 1950 to 1990.The simple truth is this: what’s happening now is a replay of those years, namely, huge American budget and trade deficits accompanied by massive accumulation of dollars outside American control.

US or China?

A legitimate question today is if America has the same leverage with China as it did with Europe and Japan because it provided military security to both. And the obvious answer is no. China is a military adversary.When the US whipped them, Europeans responded by expanding their economic union both in trade and monetarily. The EU and the euro were the result eventually. The Japanese didn’t even try. They just rolled over.It then bit the hand that fed it. So now it is its turn to be hit. But will history repeat itself a third time? We will have to wait and see.What can China do? It has tried RCEP, an Asian trading block. It has tried an Asian infrastructure investment bank. It has tried to promote the yuan as the global reserve currency, directly and via BRICS. It’s pretending it’s on a par with the US on technology — via memes. It will blackmail the US via its control of rare earths but that control has now reduced.

“The Trump administration’s ambitious agenda to reform the international financial system seems almost oblivious to the reality of America’s extreme dependence on foreign capital as reflected in its net international investment position,” said Chris Wood, global head of equity strategy at Jefferies, in a note.

Stocks globally have shed trillions of dollars and world markets have gone into a tailspin. Published on April 11, 2025 “By losing or diminishing credibility as a financial safe haven, the willingness of creditors to lend money to the U.S. is reduced,” he said. Foreigners owned trillion of U.S. debt and stocks at the end of 2024.

“Regardless of how the next 90 days evolve, the U.S.’s international reputation has been eroded,” ANZ group chief economist Richard Yetsenga said in a note.”The U.S., almost overnight, it seems to have lost its safe-haven attributes,” said Ray Attrill, head of FX strategy at National Australia Bank. But Trump’s recent moves on trade have shaken perceptions. In a matter of days he has imposed hefty tariffs on the world, made an abrupt U-turn on his decision and intensified a trade war with China, throwing into question the reliability of the U.S. administration.

Martin Whetton, head of financial markets strategy at Westpac, said this week’s massive shift in U.S. dollar swap spreads, the “sharp flash-crash” move higher in U.S. Treasury yields and the heavy selloff in the dollar showed “a stripping away of the shield of liquidity and safety”.”There is … a loss of confidence to some extent … you’re overlaying that with the loss of exceptionalism and the view that in the short-term, at least, it’s the U.S. economy that’s going to be suffering more than any other from what’s happening on the tariff front.”Things are so bad that the U.S. now has to pay investors more to borrow their money than Italy, Spain or Greece.In just a week, the dollar has gone from a safe haven to investors’ whipping boy as U.S. President Donald Trump‘s chaotic tariffs on friend and foe alike undermine decades of trust in the world’s reserve currency.

“Once the uncertainty is more or less gone, the tariff rates are set, there’s no back and forth, we’ll see the dollar getting stronger again because the eventuality is that the tariffs are set in place and this is the new normal,” said Francis Tan, chief strategist for Asia at Indosuez Wealth Management.It was the establishment of the Bretton Woods system in 1944 that cemented the greenback’s global standing. Post-war planners devised a system built on exchange rate stability and deepening international trade and the dollar remained dominant even after Bretton Woods broke down in the early 1970s.To be sure, some believe the dollar selloff could be temporary.

“The global economy is in a weaker position than it was before the tariffs. “The sudden loss of confidence was nowhere more stark than in the Treasury market, which saw the largest weekly increase in borrowing costs since 1982 as offshore funds fled.”The whole premise of the dollar as a reserve currency is being challenged, effectively, by what we’ve seen since Trump’s election,” said Attrill. For those who have piled trillions of dollars into buoyant U.S. markets in recent decades, a sharp dollar fall could result in higher interest rates for longer as price pressures at home persist, which is bad for bonds and equities.But even if it does prove short-lived, any erosion of the dollar’s standing as a safe-haven is bad news for investors.The dollar, already on course for its worst year since 2017 , on Friday plunged to a decade-low against the Swiss franc and dropped to its weakest level against the euro in more than three years.