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Governments usually manipulate exchange rates to make their currencies artificially weak, not strong.
When central banks try to manipulate exchange rates, it almost always ends in tears.Dig deeper: A referendum to boost Switzerland's gold reserves (November 2014) The market reaction to the SNB's decision (January 2015) The impact on Central Europe (January 2015).
Perhaps most troubling for its bids for U.S. work was that prosecutors said KAI executives and purchasing managers had repeatedly falsified documents to manipulate exchange rates on overseas purchases, including for items related to its training jets.
US Attorney General Loretta Lynch said that "almost every day" for five years from 2007, currency traders used a private electronic chat room to manipulate exchange rates.
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The fund is responsible for monitoring countries' fiscal and monetary policies and for discouraging them from manipulating exchange rates.
He urged Iranians not to exchange their rials for foreign currency, and warned that a group of "22 people" could face arrest for manipulating exchange rates.
"It's inconsistent," thundered the German finance minister, Wolfgang Schäuble, in an interview with Der Spiegel, "for the Americans to accuse the Chinese of manipulating exchange rates and then to artificially depress the dollar exchange rate by printing money".
Germany's finance minister accused the Americans of hypocrisy—"It's inconsistent for the Americans to accuse the Chinese of manipulating exchange rates and then to artificially depress the dollar exchange rate by printing money," he said.
"It's not right when the Americans accuse China of manipulating exchange rates and then push the dollar exchange rate lower by opening up the flood gates by turning on the printing presses," the German finance minister, Wolfgang Schaeuble, told Der Spiegel magazine, according to wire reports.
Governments influence trade flows through financing (state banks, export-import agencies), imposing conditions on foreign aid ("tied aid" which must be spent on goods and services of the donor country), and manipulating exchange rates.
Article IV of the IMF's Articles of Agreement states that "each member shall...avoid manipulating exchange rates... to gain an unfair competitive advantage over other members".
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Justyna Jupowicz-Kozak
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