What is currency manipulation and how does it affect international trade?

Currency manipulation is when a country intervenes in the foreign exchange market to weaken or strengthen its own currency. This type of manipulation can have significant effects on international trade due to the changing exchange rates. A weaker currency makes the country’s exports more competitive on the global market, while making imports more expensive. This can create an uneven playing field, allowing the manipulating country to potentially increase its exports and capture greater market share. On the other hand, a country with a stronger currency makes its exports more expensive and its imports cheaper. This could result in reduced exports due to the higher cost and discouraged foreign investment. This could limit economic growth and reduce the wealth of the manipulating country. Currency manipulation has the potential to negatively impact the international trade environment by creating market distortions and unfair competition. In California, it is against the law to manipulate currency for the purpose of gaining a competitive advantage in international trade. California’s International Trade Law requires all players in the foreign exchange market to adhere to fair and transparent trading practices, in order to ensure a level playing field.

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What is currency manipulation and how does it affect international trade?

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