A currency manipulator (also called currency intervention) is a country that employs foreign exchange policies that give it an unfair competitive advantage against its international trading partners.
The criteria to determine whether a country is using unfair currency practices are: a trade surplus of larger than $20 billion, or 0.1 percent of GDP; a trade surplus with most countries that is more than 3 percent of that country’s GDP; “persistent one-sided intervention,” defined as purchases of foreign currency amounting to more than 2 percent of the country’s GDP in a one-year period.
|This article relies largely or entirely upon a single source. (November 2008)|
Currency intervention, also known as foreign exchange market intervention or currency manipulation is a monetary policy operation. It occurs when a government or central bank buys or sells foreign currency in exchange for their own domestic currency, generally with the intention of influencing the exchange rate.
Policymakers may intervene in foreign exchange markets in order to advance a variety of economic objectives: controlling inflation, maintaining competitiveness, or maintaining financial stability. The precise objectives are likely to depend on the stage of a country's development, the degree of financial market development and international integration, and the country's overall vulnerability to shocks, among other factors.