Exchange rate
Manipulation of exchange rates

A country may gain an advantage in international trade if it controls the market for its currency to keep its value low, typically by the national central bank engaging in open market operations in the foreign exchange market, or through preventing the exchange of foreign currency for domestic notes. The People's Republic of China has been periodically accused of exchange rate manipulation, notably by Donald Trump during his successful campaign for the US presidency.

Other nations, including Iceland, Japan, Brazil, and so on have had a policy of maintaining a low value of their currencies in the hope of reducing the cost of exports and thus bolstering their economies. A lower exchange rate lowers the price of a country's goods for consumers in other countries, but raises the price of imported goods and services for consumers in the low value currency country.

This practice is known as "modern mercantilism", namely lowering the exchange rate below its real and fair price, to increase the competitiveness of trade and exports, and encourage economic growth. Rodrik said that this practice was quite effective in encouraging economic growth in developing countries but at the expense of other deficit countries.

In general, exporters of goods and services will prefer a lower value for their currencies, while importers will prefer a higher value.
detectable_content:number_placeholders[7]