"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."
"What Is Currency Manipulation?"
June 22, 2014
Dave Johnson [Not sure of Johnson's credentials on this topic, but here is his opinion.]
https://ourfuture.org/20140622/what-is-currency-manipulation
"Currency manipulation is a big deal. It is costing up to 5.8 million American jobs and costs U.S. GDP by up to $720 billion. So what is currency manipulation and how does it work?
A currency is the local “medium” of exchange. Different countries use different currencies, so to trade there has to be a way to set the exchange rate of the currencies relative to each other. The relative value of things can be different in different countries, and this can fluctuate. Maybe there is a lot of gold or corn or wood or clocks here this year here and a scarcity there … so the exchange rate of the currencies used to trade all of these things is (or should be) constantly changing.
When a country is selling more stuff to the world than it is buying (a trade surplus) the price of its currency is supposed to go up. People and businesses are buying the currency of that country to get the things from that country, which increases demand for that currency. Increase in demand for something pushes its market price up. A currency is said to be “strong” when its price is up, and it can buy more things.
Similarly a trade deficit should push the value of the currency down. When you are buying more from the world than you are selling to the world, you are flooding the world with your own currency. So world demand for your currency is low, which should push the price down. A currency is said to be “weak” when its price is down, and it can buy fewer things."
"How To Manipulate A Currency
Imagine this scenario: A country is selling more than it is buying and has a trade surplus. If markets are working correctly, its currency would become “strong” because the world is buying its currency to buy its stuff, so its goods would start to cost more. Meanwhile, its stronger currency would enable people and businesses in that trade-surplus county to buy more from the rest of the world. So over time the country should sell less and buy more, bringing its trade back into balance.
But suppose that instead of lots of people and businesses in the trade-surplus country using the stronger currency to buy more stuff from the rest of the world, that country instead has a central authority that uses the surplus of incoming cash to buy the currency of other countries. This is called currency manipulation. It bypasses the natural market supply/demand function of the currency exchanges.
By doing this the country that has been selling more than it is buying is able to keep the demand and therefore the price of other currencies up, meaning goods from those countries still cost more and goods from its own country still cost less. That country’s trade surplus continues upward instead of adjusting. Factories in other countries close, people in other countries lose their jobs and the wealth of nations shifts to the currency-manipulating country."
"China says no to 'currency war' after Trump criticism of yuan"
Fri Feb 3, 2017 | 3:32am EST
http://www.reuters.com/article/us-usa-trump-dollar-china-idUSKBN15I0R8
"China said on Friday it has never used its currency as a tool to gain an advantage in trade and was not seeking a "currency war", after U.S. President Donald Trump criticized Beijing for harming American companies and consumers with a devaluation of its yuan.Throughout his election campaign, Trump threatened to levy punitive tariffs against China in order to bring down the U.S. trade deficit, and any formal declaration of China as a currency manipulator could provide a mechanism for launching that effort.
Trump on Tuesday unleashed a barrage of criticism against Japan and China, saying the two key U.S. trading partners were devaluing their currencies."
"Trump’s Currency War Against Germany Could Destroy the EU
And that might be the point."
By Harold James
Harold James is Professor of History and International Affairs and the Claude and Lore Kelly Professor of European Studies at Princeton University. His latest book (with Markus Brunnermeier and Jean-Pierre Landau) is The Euro and the Battle of Ideas (Princeton University Press).
February 2, 2017
"Eurozone growth rises to 0.5%; Trump adviser claims euro 'grossly undervalued'- as it happened"
Graeme Wearden
Tuesday 31 January 2017 13.06 EST
"The new US administration has opened up a new front against Europe, accusing Germany of unfairly profiting from the “grossly undervalued” euro. Peter Navarro, who heads up Donald Trump’s new National Trade Council, made the comments in an FT interview today.
The comments sent the euro spiking; it’s now at its highest level since November.
But German chancellor Angela Merkel has tried to rebuff the comments, saying that Germany can’t control the value of the euro anyway.
New data has shown that Europe’s economy continues to recover -- and that price pressures are building.
Eurozone GDP rose by 0.5% in the last three months of 2016, new data shows, meaning that it grew faster last year than America.
Inflation is also on the rise; the consumer prices index jumped by 1.8% year-on-year. But the increase was mainly due to energy prices, with core inflation remaining at 0.9%.
There was also relief that the eurozone jobless rate fell again, to 9.6% in December. But the divisions in Europe were clear to see - with Germany’s unemployment rate hitting a post-reunification low, while Italy’s remains at the highest since July 2015."
"Trump’s top trade adviser accuses Germany of currency exploitation"
Berlin is using a ‘grossly undervalued’ euro to gain advantage over trading partners, says Navarro"
https://www.ft.com/content/57f104d2-e742-11e6-893c-082c54a7f539
January 31, 2017by: Shawn Donnan in Washington
"Germany is using a “grossly undervalued” euro to “exploit” the US and its EU partners, Donald Trump’s top trade adviser has said in comments likely to trigger alarm in Europe’s largest economy.
Peter Navarro, the head of Mr Trump’s new National Trade Council, told the Financial Times the euro was like an “implicit Deutsche Mark” whose low valuation gave Germany an advantage over its main trading partners. His views suggest the new administration is focusing on currency as part of its hard-charging approach on trade ties.
Angela Merkel, the German chancellor, responded to Mr Navarro’s allegations, saying Germany could not influence the euro. At a press conference in Stockholm with Stefan Lofven, Sweden’s prime minister, Ms Merkel said Germany has always “supported an independent European Central Bank”."
"Schauble Agrees With Trump That Euro Is "Too Low" For Germany, Blames Mario Draghi"
By
FAQS101-
February 5, 2017
http://buzzfaqs.com/schauble-agrees-with-trump-that-euro-is-too-low-for-germany-blames-mario-draghi/
"In surprising comments that may rekindle a verbal currency war between president Trump and Europe, German finance minister Wolfgang Schäuble told German newspaper Tagesspiegel that in his opinion the Euro is “too low” for Germany, echoing criticism from Trump’s trade advisor Peter Navarro, who last week told the FT that Germany was exploiting its US and EU partners by using a “grossly undervalued” euro to create a vast trade surplus. The comment placed Germany, alongside China and Japan, in a category of countries that the Trump administration has accused of currency manipulation for competitive advantage.'
