Question

discuss exchange rates in general, what they are, and how they impact trade. What is a currency manipulator? What advantage does currency manipulation provide. How could currency manipulation be achieved?

Answer 1

Trade balance affects currency exchange rates by influencing foreign exchange supply and demand. There is comparatively more supply or demand for a country's currency, which affects the value of that currency on the world market, when a country's trading balance is not net to zero that is, when exports are not equal to imports. Currency exchange rates are quoted as relative values; a currency's price is defined as a different currency

The market for money, which in turn is driven by trade, affects these relative values. If a country exports more than it imports, its goods and therefore its currency are in high demand. Delivery and demand economics dictate that when demand is high, prices will rise and the currency will rise in value. On the other hand, if a country imports more than it exports, the demand for its currency is relatively lower, so prices should fall. It is depreciating or losing value in the case of currencies.

Currency manipulator' means a label given by the U.S. government agencies, such as the U.S. Treasury Department, to countries engaging in a certain degree of currency intervention, a monetary policy in which a central bank buys or sells foreign currency in exchange for domestic currency, usually with the intention of manipulating the exchange rate and the p. Policymakers may have different reasons to intervene in currencies, such as inflation control, international competitiveness or financial stability

Devaluation of currency includes taking steps to reduce the purchasing power of a nation's own currency strategically.
Countries should follow such a policy for obtaining a competitive edge in global trade and reducing the burden of sovereign debt. However, devaluation can have unintended, self-defeating consequences.