Currency manipulation occurs when a government or central bank deliberately intervenes in foreign exchange markets to artificially weaken or strengthen its currency for competitive advantage. It is typically done to make exports cheaper and imports more expensive, and is considered a controversial trade practice by international organizations like the IMF. Countries identified as currency manipulators may face diplomatic pressure, trade sanctions, or retaliatory tariffs from trading partners.
Example
“The US Treasury Department monitors trading partners for currency manipulation, and countries found to deliberately weaken their currencies to gain trade advantages may face diplomatic pressure or trade sanctions.”