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Currency Manipulation

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Currency manipulation is the act of changing its value against other currencies instead of leaving it free to fluctuate based on market dynamics. This can be done by fixing the exchange rate or deliberately increasing or decreasing its value.

This practice is usually frowned upon since it results to an artificial distortion in currency prices. In fact, it is considered an illegal practice based on US laws and international agreements.

This could also give way to unfair trade advantages since artificially devaluing a country’s currency could make its exports relatively cheaper and more attractive. In the long run, this could eventually result in a global trade imbalance.

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