What is a Currency Manipulator?

● Currency Manipulator is a label given by the US Treasury Department to countries that deliberately influence the exchange rate between their currency and the US dollar to gain unfair competitive advantage in international trade. 

● Criteria: To be labeled as a currency manipulator by US, countries must meet at least two of the three criteria’s: 

○ A significant (at least $20 billion) bilateral trade surplus 

○ A material current account surplus, and  

○ A ‘persistent one-sided intervention’ in forex markets. 

● Consequence: The designation of a country as a currency manipulator does not immediately attract any penalties but tends to lower the confidence about a country in the global financial markets. 

 

Why in News? The US treasury has placed India along with 10 other countries on its currency manipulator watch list.