What is currency manipulation? | CNBC Explains

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 Comments

  • Josh Hawn

    April 23, 2019

    thise asian girls where back there like wtf is he doing? lol Prob not smart to have cash in public.

    Reply
  • lee david

    May 10, 2019

    Trump clearly has no idea wtf he is talking about

    Reply
  • Karna 257

    May 12, 2019

    You explained shit

    Reply
  • Pablo Graue

    June 22, 2019

    This explanation sucked.

    Reply
  • Lets Get Smarted

    June 28, 2019

    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.

    Reply
  • Scupacium

    July 8, 2019

    i doubt if trump understand what heis talking about

    Reply
  • Gunjan Mehta

    July 13, 2019

    You guys are putting great learning videos on your Youtube Channel. Great work guys… Keep rocking…

    Reply
  • Avik Saha

    July 14, 2019

    Let's start the barter system again…

    Reply
  • Jim Roy

    July 17, 2019

    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.

    Reply
  • mon_fi

    July 29, 2019

    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.

    Reply
  • Francis Frank

    August 1, 2019

    What i just got from the video is prejudice CNBC treating to China and proud of what America has done.

    Reply
  • fulaan1

    August 3, 2019

    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?

    Reply
  • Wyo Dragon

    August 3, 2019

    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.

    Reply
  • Wyo Dragon

    August 3, 2019

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

    Reply
  • Mr. Albert

    August 4, 2019

    I still dont understand

    Reply
  • SHADUMAN

    August 5, 2019

    Slim shady track vibe

    Reply
  • Dew Time

    August 5, 2019

    I can tell this is biased just by the music in the background. What a joke

    Reply
  • katwillny

    August 5, 2019

    Lower your music

    Reply
  • Mike

    August 5, 2019

    AND LOOK BIG OL TRUMP WAS RIGHT , HAHAHA TO ALL THE PEOPLE WHO SAID THIS WAS “BS”

    Reply
  • The Truman Show

    August 5, 2019

    Monetary expansion?

    Reply
  • Brenden Craven

    August 6, 2019

    Looks like Trump was right! Hello China

    Reply
  • J Dee

    August 6, 2019

    I guess he fallowed through on his promise

    Reply
  • vidvidvid

    August 6, 2019

    Trump is right, yet again.

    Reply
  • Troy

    August 6, 2019

    This didn't age well

    Reply
  • Tom Smithsss

    August 6, 2019

    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 .

    Reply
  • Wally Wally

    August 6, 2019

    XI JINPING must stop breast feeding from AMERICA PERIOD, no more milk Xi Jinping.

    Reply
  • Yip Choong

    August 6, 2019

    All countries manipulate
    All seawater is salty
    This is a stupid video

    Reply
  • Victor Chew

    August 6, 2019

    Teaching the kids how to play monopoly.

    Reply
  • Oliver Phippen

    August 6, 2019

    Not a good explanaition ????

    Reply
  • বিশ্বাস BISWAS

    August 6, 2019

    it means US dollar sucks🤣😂

    Reply
  • Tony SK Lai

    August 6, 2019

    Trump is wrong this time due to it is real burst as reservations exhausted.

    Reply
  • Jab Gab

    August 6, 2019

    This is THE worst explanation of currency manipulation.

    Reply
  • Paul Rice

    August 6, 2019

    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.

    Reply
  • April L. Hughes

    August 6, 2019

    US is the best at! Cant beat uncle sam at his own game

    Reply
  • rama chandra raju rajasagi

    August 6, 2019

    Is the guy at 0:55 from Buzz Feed's Worth IT series?

    Reply
  • Gerard

    August 7, 2019

    Mark of the beast coming.

    Reply
  • collapsing distance

    August 7, 2019

    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?

    Reply
  • CIVIL ENGINEERING WORLD

    August 7, 2019

    Trump is bullshit!!

    Reply
  • Ken Chester Ilaya

    August 7, 2019

    Should I believe CNBC?

    Reply
  • Howe Trinh

    August 7, 2019

    A lot make news from the master of this skill, Trump

    Reply
  • E C

    August 7, 2019

    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.

    Reply
  • Ankit Jain

    August 7, 2019

    Next do a video on “HOW to manipulate currency”

    Reply
  • Silvia Tjhia

    August 7, 2019

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

    Reply
  • Papyrus Okagbue

    August 7, 2019

    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

    Reply
  • QQJason

    August 7, 2019

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

    Reply
  • Makro Lee

    August 7, 2019

    damn, this guy confused me and i still dont get his point!

    Reply
  • Chris Jenkins

    August 7, 2019

    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.

    Reply
  • Pao Lee

    August 7, 2019

    2 years later, no real solutions yet.

    Reply
  • AceGhostification

    August 8, 2019

    I saw some Malaysian currency there

    Reply
  • Chinese American

    August 8, 2019

    Please don’t put music on

    Reply
  • Luis Hernandez

    August 8, 2019

    Note on the back ground music turn it down it’s hard to hear you speaking as it is!

    Reply
  • Positive Energy SG

    August 8, 2019

    Funny.. when i read currency manipulation.. EURO's QE.. FED comes to mind too..

    Reply
  • Bugatti Boss

    August 8, 2019

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

    Reply
  • JoeL

    August 8, 2019

    Thanks for your efforts, but see the comments, maybe you need to find another job

    Reply
  • Uzair Hussain

    August 8, 2019

    Worst Explanation Ever.

    Reply
  • Gia Pacella

    August 8, 2019

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

    Reply
  • Gia Pacella

    August 8, 2019

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

    Reply
  • Lee Wallace

    August 9, 2019

    Fuck China

    Reply
  • Claude Celis

    August 9, 2019

    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…

    Reply
  • coolinspire funnybook

    August 9, 2019

    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 ?

    Reply
  • s c

    August 9, 2019

    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?

    Reply
  • Oh Snap!!!

    August 9, 2019

    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.

    Reply
  • c t

    August 10, 2019

    Hypocrites

    Reply
  • Nilton Dos Santos

    August 10, 2019

    I think U.S the Greater all manipulated in world….😀😀😀

    Reply
  • Rajagopal Nara

    August 10, 2019

    Not clear explanation and I didn’t understand much of currency manipulation

    Reply
  • Radha Krishna Ramagiri

    August 10, 2019

    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.

    Reply
  • Maxime Mobayen

    August 10, 2019

    and trump is a (stock market manipulator) perfect example look at all the tweets he posts

    Reply
  • Don’t my. Name is Don fat. Heads. Carmichael

    August 10, 2019

    China. Is. Broke now you know. It. Is. Printing. Money.

    Reply
  • David Rabinowits

    August 11, 2019

    Huh??

    Reply
  • snakecharmer2011

    August 11, 2019

    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….

    Reply
  • Trump2024

    August 11, 2019

    China doesn't care about laws or human rights.

    Reply
  • Guo Chen

    August 11, 2019

    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.

    Reply
  • Phillip Farmer

    August 12, 2019

    China is the only country he’s called a Currency manipulator.

    Reply
  • Esoct Prod

    August 12, 2019

    So how does monopoly money gains value in monopoly land?

    Reply
  • mark o

    August 13, 2019

    To bad this is cnbc you know fake news.🖕🏻

    Reply
  • Sowar

    August 13, 2019

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

    Reply
  • 5D SPIRITUAL CONSCIOUSNESS

    August 14, 2019

    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 🖕🖕🖕🖕

    Reply
  • annonymous commentor

    August 14, 2019

    "Reasons for currency manipulation" should be the name of the video.

    Reply
  • جعفر حیدری

    August 14, 2019

    عالی

    Reply
  • Ronald Mitaxa

    August 15, 2019

    Trump is a total fuckwit

    Reply
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    August 16, 2019

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    Reply
  • bkit5

    August 16, 2019

    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.

    Reply
  • J Y

    August 20, 2019

    this is the worst video I've ever seen

    Reply
  • hans daren

    August 23, 2019

    Lol..unfair

    Reply
  • Darman hashim

    August 25, 2019

    you mean paper money with no value.

    Reply
  • Darman hashim

    August 25, 2019

    that is the explanation cnbc wants you to believe. they think youtube viewers are only usa. but it is the whole world

    Reply
  • SURF KHAN

    August 25, 2019

    I want to know how manipulates 😡

    Reply
  • Pray Suguitan

    August 25, 2019

    Soros is the one(?)

    Reply
  • David Christian

    August 25, 2019

    the music is higher than the voice

    Reply
  • abhay

    August 26, 2019

    What's up with all this childish and stupid background music!

    Reply
  • Lincoln Muri

    August 27, 2019

    Such a poor video. How do you manipulate the currency, didn't you think that was important to explain? Don't make half-assed videos to promote your brand, it's terrible.

    Reply
  • Akash J Dutta

    August 27, 2019

    No please never trust Trump.. He always reverse the point in the morning what he he has told at previous night.Seeing leaders like BJ,Trump we must say Democracy a joke..

    Reply
  • Christian Tambun

    August 27, 2019

    You are fake news dumbass

    Reply
  • Vinay Kumar

    August 31, 2019

    thank u for the music, helped me understand better!

    Reply
  • Arga Riski

    September 5, 2019

    Look
    https://youtu.be/I47v0CUKHZo

    Reply
  • Sandroid

    September 9, 2019

    The guy doesnt seem to understand the concept himself or is just bad at communication.
    Btw shouldn't commercial consideration by Rahman Forex be stated in the thumbnail in the interest of Transparency @CNBC?

    Reply
  • Michael John Catubuan

    September 11, 2019

    Gets!!!!

    Reply
  • Jarrod Yuki

    September 11, 2019

    china needs US currency and oil to complete belt and road initiative. chinese students also need to stay in the us to siphon tech secrets.

    Reply
  • tapas panigrahi

    October 1, 2019

    Loved the way he said it 🤣🤣🤣👌"Choina iz a corrency maniipulator "

    Reply
  • Kevin McGrath

    October 11, 2019

    I still dont get it

    Reply

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