Currency Manipulation for Trade Policy and Rate -myassignmenthelp

Question: Discuss about theCurrency Manipulation for Trade Policy and Rate. Answer: Currency manipulation is a policy operation of monetary. Currency manipulation occurs when the government sells or purchase foreign currency in exchange for their domestic currency while having an intention of influencing trade policy and exchange rate (En.wikipedia.org, 2017). Do you think the Japanese government is engaging in currency manipulation? The Japanese economy has undergone slow economy declination. The output activity of Japanese was deteriorating. In the sense of an increase in the rate of unemployment, negative inflation rate. Several banks had failed too as financial sector confidence diminished. With the aim of bringing an end to economy deflation and stabilize the financial system, there was a constraint on the traditional policy instrument efficiency since the rate of policy interest was at zero. Abe campaign demonstrated the aim of manipulating the yen so that exporters could benefit. Among his campaign manifesto was to manage the value of the yen to help the Japanese exporters. The policy under Japanese central bank of accelerating the purchase of government securities, hence expanding the money supply leading to higher inflation. The support from the government of Abe of this policy shows the manipulation done on the currency. The Japanese yen continued to lose its value against dollar currency. This policy favored Japanese exporter and stimulated demand in domestic. This is because of a cheap currency, cheapens the export currency price, making the exports more attractive to the buyer from international through undercutting competitors (Money.cnn.com, 2017). What should other nations do about this? Other countries have tried to devalue the currency to remain at the competitive edge. While the united states have disagreed to follow the suit of devaluing its currency. The move of devaluing the currency has intensified the fears of trade war among the nations. Other nation should criticize its quality of products that make them stand out. As is seen in the case of Japanese, after devaluing the currency, the export increased to only 2 percent. References CPA2017. (2017). Currency Manipulation Is a Real Problem. [online] Available at: https://www.prosperousamerica.org/currency_manipulation_is_a_real_problem [Accessed 18 Nov. 2017]. En.wikipedia.org. (2017). Currency intervention. [online] Available at: https://en.wikipedia.org/wiki/Currency_intervention [Accessed 18 Nov. 2017]. Money.cnn.com. (2017). What is currency manipulation, anyhow? - Nov. 10, 2010. [online] Available at: https://money.cnn.com/2010/11/10/news/economy/what_is_currency_manipulation/index.htm [Accessed 18 Nov. 2017]. Uneasy Money. (2017). Is Japan a Currency Manipulator?. [online] Available at: https://uneasymoney.com/2013/05/30/is-japan-a-currency-manipulator/ [Accessed 18 Nov. 2017].