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The Currency Manipulation Watchlist consists of those countries that the United States Department of the Treasury believe is engaging in 'unfair currency practices' that give them an advantage in trade.

Currency manipulator is a designation applied by United States government authorities, such as the United States Department of the Treasury, to countries that engage in what is called ?unfair currency practices? that give them a trade advantage.

Currency manipulation happens when one of our trading partners buys up U. S. assets such as treasury notes and bonds, which make the value of the dollar artificially high. By making the dollar more expensive, it makes our exports more expensive and makes the foreign countries' products cheaper.

Devaluing Currency A weak domestic currency makes a nation's exports more competitive in global markets and simultaneously makes imports more expensive. Higher export volumes spur economic growth, while pricey imports also have a similar effect because consumers opt for local alternatives to imported products.

Currency manipulation is an effort to tinker with the value of a nation's currency about foreign currency exchange rates to boost exports in international trade or reduce its debt interest burden. Currency devaluation can lead to trade wars and backfire on the country trying to undertake it.

It's hard to define and even harder to prove. At one level, any country that has a fixed exchange rate?such as France, Germany, Greece, and China?is, by definition, a currency manipulator. The question is whether a country has kept its currency artificially cheap to boost exports.

This act requires Treasury to analyze and report semiannually on the exchange rate policies of major U.S. trading partners. If countries are found to be manipulating their currencies, the act requires the Treasury Secretary, in some instances, to initiate negotiations to eliminate the unfair trade advantage.

Simply explained, in order to weaken its currency, a country sells its own currency and buys foreign currency ? usually U.S. dollars. Following the laws of supply and demand, the result is that the manipulating country reduces the demand for its own currency while increasing the demand for foreign currencies.