Accusations against Asian policymakers of perfidious currency manipulation to help their exporters gain price advantages are commonplace, and have helped engender or justify protectionist rhetoric and reactions from governments in Europe and the US.
While Western governments have characterised foreign exchange intervention by Asian central banks as manipulation, giving their exporters an unfair advantage, Asian policy makers have responded that their actions are motivated by a reasonable attempt to contain excessive currency speculation. A surge of capital inflows, they argue, can easily segue into outflows, creating currency volatility or worse -- a replication of the collapse in asset prices suffered 12 years ago,...
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