Economics Exchange Rate Systems Questions
Currency manipulation in international trade refers to the deliberate actions taken by a country's government or central bank to artificially influence the value of its currency in order to gain an unfair advantage in trade. This can be done through various means, such as buying or selling large amounts of foreign currency, implementing capital controls, or manipulating interest rates.
By manipulating their currency, countries can make their exports cheaper and more competitive in international markets, while making imports more expensive. This can lead to an increase in exports and a decrease in imports, resulting in a trade surplus for the manipulating country.
Currency manipulation can have significant impacts on global trade and can distort market forces. It can create trade imbalances, hinder fair competition, and harm other countries' industries and economies. As a result, currency manipulation is often seen as a violation of international trade rules and can lead to trade disputes and retaliatory actions by affected countries.