What is currency manipulation? | CNBC Explains


It’s been one of Trump’s favorite accusations toward other nations. Currency manipulation. A currency manipulator. China is a currency manipulator. But how can banknotes like these, be manipulated? Let’s break it down. One example of currency manipulation is what a country might do when it wants to minimize the effects of having a strong currency. Let’s say for example, that one U.S. dollar is equal to ten dollars in the Republic of Monopoly and with ten Monopoly dollars, I can buy one cup of coffee from the United States. Now imagine that gradually inside the Republic of Monopoly, the economy starts doing very well and is extremely stable. The currency naturally could rise against all other currencies. So now that one U.S. dollar only earns you eight Monopoly dollars instead of ten. For me to buy that same cup of coffee from the United States, I only need to pay eight Monopoly dollars. So, it’s cheaper for me. So, this currency has become more valuable. My citizens have more spending power when they travel abroad and as a country we have more buying power when I want to import goods. So, what’s the problem? Why manipulate? Say I want to sell muffins to the U.S. Instead of the U.S. paying me one dollar like it used to, it would now cost them $1.20, all because my economy was stronger and my currency is doing well. No real change in taxes or monetary policy and if I’m a large exporter and shipping out more goods than I’m bringing in, like China, this makes my goods much less competitive. In fact, you might even begin buying from another country. Hence, the urge to manipulate. There is a number of other reasons a country might choose to do this besides maintaining competitiveness, including wanting to control inflation or just maintain its own financial stability. China, is of course one of the most targeted countries for currency manipulation. When it devalues its currency, it essentially wants to keep the cost of all its goods and services less expensive than other countries. It’s the world’s second-biggest economy after the U.S. but according to experts, it actually hasn’t been pushing down its currency to benefit Chinese exporters in years and even if it were, there’s a law which requires the U.S. to spend a year negotiating a solution before it can retaliate. President Trump recently backtracked on his initial stance of labeling China as a currency manipulator but his accusations aren’t completely unfounded. In 1994, the U.S. branded China a currency manipulator. Under the law, though labeling a country as such can trigger an investigation and require negotiations on tariffs and trade. China’s yuan is becoming more influential on the global scale. It was recently added to the International Monetary Fund’s basket of reserve currencies which are currencies deemed safe, reliable, and freely used. Joining the U.S. dollar, the euro, the yen, and British pound. In fact, it was the first time a new currency was added since the euro was launched in 1999. The move positions China and its currency as a global economic power, which is why it’s so important for it to maintain that currency’s credibility.

100 thoughts on “What is currency manipulation? | CNBC Explains”

  1. so he who owns the Valuable currency is not the richest Rather the one who supplies the goods to all. After all we can't eat money.!!

  2. Please USA help INDONESIA FROM CHINA INVASION.

    PLEASEE…

    THERE ARE MUCH MANIPULATION FROM CHINA IN OUR COUNTRY.

    REGARDS.

    WE NEED HELP.

  3. Us dollar is a promise to pay that it….has no real value but is backed up by the gold they supposed to have in the vaults reserve. Federal reserve note….lincoln tried to change that but was killed by the rich banks rokefeller Then the other 3 potus killed same reason. Potus are puppets of the banks. Irak tried to sell oil in euros sadam killed. Gadafi tried to sell oil in siria money killed. Arabia using dollars. No problems women has not rights humans rights doesnt exist they are dictators. But who cares if they use dollars

  4. Lol… The thing is China is not the only one which manipulating its currency… The number 1 doing that since China's rapid economic growth is Japan… Every damn country is manipulating their currency for the sake of their national economy and interests… The sore loser USA can suck it… Lol…

  5. This was a poor explanation, in compharison with other CNBC videos. You could've talked about the market mechanisms that make currency manipulation possible and also give some examples of market manipulation in history; Talk about how that affects the life of people, entrepreneurs, politics and the market itself, too.

    I'm just saying it cause I know you guys can do better than that.

  6. I have the perfect solution for this world economy. its a brand new calculation. It keeps the current economy in tact, but the calculation is revolutionary and it is right in front of us. I also have the answer to why mankind doesn't see it. I have had it since i was 8 years old. I worked it out and it works
    FYI i am not a prophet or a genius. I am Just good with numbers and solving problems.

  7. There´s no such thing as "currency manipulation". It is just a simpler way to raise or low prices of everything. What China did is kind of quoting themselves higher onto the United States, which is totally acceptable. It is up to american consumers whether to decide buying or not buying to China.. someone please correct me if I am wrong? This video explained nothing..

  8. quanttive easing is currency manipulation. and US does it to export inflation to other nations. if you google Plaza Accord we did that to Japan to slow down the economy, for the past two decades. that's some ally to you. LOL

  9. Damn. The USA is so afraid of China and can’t compete with them so they try to ruin their image in front of the world. What a pitiful country.

  10. Ohh so currency manipulation is when they manipulate a currency. thanks for clearing that up CNBC, I can always rely on corporate media for in-depth explanations of important topics.

  11. Why not distribute equal number of money to every person in world. So every country has same value in currency. After all its just paper or card. All poverty can end. But why few nations want to retain to be privileged one, thats the beginning of the problem.

  12. Really nice, but here's how China actually manipulates its currency.

    If a US compay wants to buy in China, it needs to exchange USD for Yuan. If a European, Turkish or Japanese wants to buy from China, it needs to do the same, hence, the Chinese Yuan will increase in value while the USD, Turskish Lira, Japanese Yen and Euro will decrease in value as they are being "sold".

    What China does, therefore, is the opposite: buying exchange currency with its own in order to one side, keep the price of USD, €, Yen and Lira high, and keep the price of the Yuan low.

    Summary: while everyone is buying Chinese Yuan which would normally increase its value, China is buying all other currencies with Yuan to keep the value of the other currencies up and the one of Yuan down.

  13. 2:20 if your economy is getting stronger why would inflation be an issue? There would be know need to produce more currency since it’s purchasing power is increasing. Can someone with more knowledge explain?

  14. CNBC gets it totally wrong. A currency manipulator is a country that decides to disconnect its currency with the gold standard in order to take advantage of other countries. This is what Nixon did with the US dollar. Truly, the currency manipulator is USA. If USA did not manipulates its currency, it would not have the ability to print it at will.

  15. Like everything else, Donald Trump defines words, terms and notions according to his fancies without regard to the reality. He is a dotard.

  16. This guy does not know China manipulate mean in this trade war. China want to lower it currency so the cost be cheap so you can buy more because their yaun is devalue. That give them more jobs and export more product while USA lose job and etc .. because now everyone want to buy 1 dollar for two product instead of 1 before .

  17. China 🇨🇳 is a currency manipulator, fact is China 🇨🇳 allows its people and only its people to ship 🛳 to America and all the other countries for free (subsidized by the Chinese government) while charging American and other none Chinese companies and people living in China 🇨🇳 a large fee. Making it almost impossible to compete with Chinese people. So what President Trump is doing is only fair by placing tariffs on China 🇨🇳 products or anything coming out of China 🇨🇳 a fee to balance the trade gap. Many marketers hate this because it cuts into their profits margins even though it hurts American who buy the products. What President Trump is trying to do is make American products made in America more competitive and attractive to Americans who buy said products making the American economy grow.
    This encourages American companies to leave China 🇨🇳 and or make their products elsewhere or in America. So…. what Chinese companies are doing is moving their company’s to places like Vietnam 🇻🇳 or just trying to be tricky and just ship 🚢 their products from Vietnam 🇻🇳. Chinese are very tricky people.
    We should just call them trick daddy.

  18. Why use monopoly money as opposed to an actual currency? Why use muffin instead of a car or a computer? Who are making the decisions to manipulate a currency? HOW STUPID IS THIS FUCKING PRESENTATION?

  19. So… let me get this straight. China devalue its currency so that the goods china made is cheaper for consumers in all parts of the world including America. But America dont want low price and label china as currency manipulator so that china currency is more value thus making china goods more expensive for american consumers.

    So… does america wants to continue keeping cost of living low in america or is america more willing to pay more for china goods? Which one…Orange man did say, the trade has to be in favour of America, so the price of goods have to be low, in so doing it means devaluing of currency, so that america can buy more. But orange man says the price needs to be higher, which means america buy less, in so raising the value of currency. Is orange man for america or against america.

  20. orange western talk bs again. lol. let see who taps out first. first agriculture will down. there is 2nd card. prepare!!!!

  21. Weaponizing the Dollars has accelerated the demise of US Empire.

    https://www.zerohedge.com/news/2018-08-24/weaponizing-us-dollar-accelerating-global-de-dollarization

  22. Trump is the biggest manipulator. One tweet can send a stock or currency UP or DOWN. His buddies are getting bloody rich

  23. If the dollar is up for sale, it stands to reason to buy it if it helps achieve your goals. I don’t see the difference between that and manipulating interest rates.

  24. The Greatest Currency Manipulater is the West and their Federal Reserve. Printing money out of thin air and buying physical Goods with it

  25. Commie China in a nutshell 🇨🇳🛑🛑🛑🛑 AMERICA stop buying Commie goods lining China pockets…

  26. China moves the Yuan …fake value… one day 7 next day 7.25 on and on… Commie China Commie Goods 🤮🤮🤮🛑🛑🛑🇨🇳

  27. Currency Manipulation is plainly printing your major currencies, $, ¥,£ etc. With no really back up value but mere ignorance of the 3rd world countries were dictates of world trading robs them with the real value of of their money incurred to the whole thieves of citizens in the world. Explain how a $1 = P2 in 1960, then by 1970 shoot ups more than 4x, and now at P50 per $1, We are not that intelligent though, yet we're not that dumb also, how can that currency be devaluated the fact that there is no longer a gold standard and that all you pledges are all iou's treasury bonds wherein with no intrinsic value… All of you progressive countries did know how you are robbing the entire world and its abused population… Beware, for it came also like a thief…

  28. what trump expect ? china just sit still and watch him put dent on China export when he rise tariff ?????
    its like u expect people to just sit still after u punch him and when he punch back u said hey everybody see, he revenge ???
    There is a reason back why China may do what they do.
    Trump do is like what he did to all his ex wife. after no more to take,he dump her.
    Before china rise like today, china only being used by USA as low cost producer by USA manufacturer so there product cost is low but sell at the same price at USA.
    but when China start to get more profit from the export and can make their own product that compete with usa product, USA by trump start to tariff that export.
    Is like when u like to use a slave after your slave can be entrepreneur by profit from the way u slave them,u try to kick your slave.
    So whos unfair then ?

  29. What a dishonest and slimy way of implying China is a currency manipulator by saying that Trump's assertion is not without foundation! Where is the evidence? Is that honest journalism? Or back stabbing?

  30. Average Americans don't understand that China's ability to manipulate their currency value is because they can survive tariffs or a slowed export market into the U.S.. Where are you going to buy your cell phones from, General Electric? Idiot Americans think that China owes them something. Do you think China's chanting "America First"? They're looking out for their best interests just the same as we're looking out for our best interests, not China's. If we were looking out for them, we wouldn't be praising Trump's tariffs on China, which are intended to hurt China. The problem is, most Americans are barely functionally literate and don't have a degree in Economics, just a TV turned to Fox News, and rather than learn about how the world actually functions, it'seasier to just parrot Trump and Fox News. In conclusion, we're fucked because we have too many lazy morons who can't figure out that the smartest among us are the immigrants working in Economics and the STEM fields.

  31. They are piling USD and are giving manipulated competition to other countries. Trump is the best President and perfect business gentleman.
    No wonder Chinese premier is having pain in the Ass.

  32. CURRENCY MANIPULATOR??? ISN'T THAT THE UNITED STATES THAT PRINTS, PRINTS, PRINTS PAPER MONEY WHEN YOU DON'T HAVE ANY MONEY LEFT!!!

    LOL

    IT'S THAT'S NOT MANIPULATING THE CURRENCY'S VALUE, THEN I DON'T KNOW WHAT IS….

  33. China invented the paper, and paper money. After 4000 years of money management, Chinese know more about money than the West. Chinese money management policies are the best. The Western money system as set up by the mathematician Isaac Newton was good and stable, until the faulty notion of floating currency was introduced in the West.

  34. This was a terrible explanation. Does this guy even have an economics degree? If any wants an actual explanation I recommend marginal revolution university.

  35. WTF ARE talking about the US DOLLAR has nothing backing up his value IT SHOULD BE WORTHLESS is just pure fiat cureency THE U.S. DOLLAR IS THE MOST MANIPULATED CORRUPT FAKE CURRENCY IN THE FUCKING HISTORY OF THE WORLD 🤔STUPID PEOPLE DON'T YOU KNOW THAT IDIOTS 🖕🖕🖕🖕

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  37. I'll explain simpler. Market value of an African currency is very low. US dollar has a high market value. Who determines the currency values? Investors and common men who invest in foreign currency based on the projection of the country economic growth. The US can get something for 10 cents if it made it in Africa, where as it would cost a dollar to make it in the USA. Reason? currency market value. So now US companies give 500 billions of dollar to African companies to manufacture for them. Now the African companies need to convert the US dollars they received into African currency so that they can buy and pay people and raw materials and start the work. When they buy the African currency using US dollar, demand for African currency goes up increases the market rates. Now since billions of newly traded African currency is brought back to Africa, the value of the African currency inside African goes down. They call it inflation, hence what was costing 10 cent to make in Africa will now cost 20 cents, because of both inflation in Africa and increase market value of the African currency. Because it is now more expensive the US companies will not give the same amount of business to African anymore. So the African government does shady thing to manipulate by the market value of African currency by purchasing billions of the US dollars from their reserves of the African currency they have. This will increase the US dollar and reduce the market value of the African currency, because there is more supply of African currency in the Foreign Currency Exchange Market.

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