What is Currency Manipulation?

• Pages: 175

Page 175

The IMF's Articles of Agreement state that member countries shall "avoid manipulating exchange rates . . . to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other members."

But they provide little guidance on what constitutes such exchange rate manipulation.

The 2007 Decision on Bilateral Surveillance fills that gap by clarifying the type of behavior that is at issue.

The decision provides that a member would be "acting inconsistently with Article IV, Section 1 (iii)," if the IMF determined it was both engaging in policies that are targeted at-and actually affect-the level...