The Art of Currency Manipulation : How to Profiteer by Deliberately Distorting Exchange Rates
A frequent charge in foreign exchange markets in developing countries is that of manipulators being at work. Since to buy is to raise prices and to sell is to lower prices, the question that naturally arises is whether the widespread charge of mark...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2013/09/18269054/art-currency-manipulation-profiteer-deliberately-distorting-exchange-rates http://hdl.handle.net/10986/16835 |
| Summary: | A frequent charge in foreign exchange
markets in developing countries is that of manipulators
being at work. Since to buy is to raise prices and to sell
is to lower prices, the question that naturally arises is
whether the widespread charge of market manipulation is
valid. The paper shows that (whether or not
"widespreadness" has any merit) it is possible for
a player to manipulate and profiteer. By using some simple
principles of game theory, the paper outlines a strategy
that a manipulator may use. The aim of this paper is not to
provide a manual for the manipulator but to enable the
regulator to understand the art and develop policies to curb manipulation. |
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