What it is
Currency manipulation occurs when a country's government or central bank intervenes in foreign exchange markets to artificially devalue or undervalue its currency. This is typically done by buying foreign currency or selling its own currency in large quantities, making its exports cheaper and imports more expensive. The goal is often to boost exports, reduce trade deficits, and stimulate domestic economic growth, but it can draw criticism for creating unfair competitive advantages in international trade.
Allegations of currency manipulation frequently surface in international trade disputes and policy discussions, particularly when countries accuse others of gaining an unfair trade surplus. If a country is officially labeled a currency manipulator, it can face diplomatic pressure, sanctions, or retaliatory tariffs from other nations. Investors monitor these accusations and government responses as they can impact exchange rates, the cost of imported and exported goods, and the profitability of multinational corporations, affecting global trade balances.
Why it matters
Currency manipulation can alter the prices of imported goods, influence the value of your investments in international markets, and spark trade disputes.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice