Is the U.S. a Currency Manipulator?

The trade-weighted U.S. dollar index has depreciated by almost 40% over the last ten years vs. the world’s major currencies (see chart above). Does that make the U.S. a currency manipulator? Here’s a little editing fun of this article:

China The United States flatly denies that its currency manipulation undervalues the renminbi (yuan) dollar by 40 percent and has become one of the foremost impediments to fair and equitable global trade, experts say.

“That undervaluation of the renminbi dollar acts as a subsidy for Chinese American exports, artificially making them as much as 40 percent cheaper when sold in outside the U.S. Conversely, it acts as a tax of as much as 40 percent on Americanforeign-made goods sold in China the United States,” according to a recent article on The Hill’s Congress Blog.

About Mark J. Perry 262 Articles

Affiliation: University of Michigan

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

He holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University in Washington, D.C. and an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota.

Since 1997, Professor Perry has been a member of the Board of Scholars for the Mackinac Center for Public Policy, a nonpartisan research and public policy institute in Michigan.

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1 Comment on Is the U.S. a Currency Manipulator?

  1. One way to look at the fed’s policy is simply that after years of asking China to allow the RMB to seek its natural valuation through market mechanisms (which prodding the Chinese openly detested), the US decided that instead of chiding to no effect it would take unilateral action to get the desired effect. This might not be true — it might be that the U.S. would have had the same monetary policy regardless of the RMB peg — but I doubt it.

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