An exchange rate is the price of a country's currency relative to other currencies. At the heart of disagreements is whether or not countries are using policies to intentionally push down the value of their currency in order to gain a trade advantage at the expense of other countries. A weak currency makes exports cheaper to foreigners and imports more expensive to domestic consumers. This can lead to higher production of exports and import-competing goods, which could help spur export-led growth and job creation in the export sector. Instead, consumers and certain sectors may benefit when other countries have weak currencies. Specific Debates over Exchange Rates

In current debates about exchange rates and whether countries are engaged in unfair currency policies to weaken their currencies, two major types of concerns have been raised: first, concerns about countries engaged in interventions in foreign currency markets, and second, concerns about the effects of expansionary monetary policies in some developed countries on exchange rate levels. U.S. Laws Addressing Currency Manipulation

Some Members' concerns about currency manipulation and its impact on U.S. producers and workers have led to legislation over the past several decades. These designations occurred in the late 1980s and early 1990s; Treasury has not determined that currency manipulation has occurred under the terms of the 1988 Trade Act since it last cited China in 1994. 114-26 ), the most recent TPA legislation signed into law in June 2015, includes for the first time principal negotiating objectives addressing currency manipulation. Trade Facilitation and Trade Enforcement Act of 2015

Currency manipulation is addressed in the Trade Facilitation and Trade Enforcement Act ( P.L. If a country has failed to adopt appropriate policies to correct the currency undervaluation and surplus after a year of enhanced bilateral engagement, the President is to take one or more of the following actions:
Prohibit the Overseas Private Investment Corporation (OPIC) from approving any new financing for a project in that country; Prohibit the federal government from procuring goods or services from that country, as long as it can be done in a manner that is consistent with U.S. obligations under international agreements and would not impose an unreasonable cost on U.S. taxpayers; Instruct the U.S. Executive Director of the IMF to call for additional rigorous surveillance of the macroeconomic and exchange rate policies of that country and, as appropriate, formal consultations on findings of currency manipulation; and/or Instruct the U.S. Trade Representative to take into account the extent to which the country has failed to adopt appropriate policies to correct undervaluation and surpluses in assessing whether to enter into bilateral or regional trade agreement with that country or participate in negotiations with respect to a bilateral or regional trade agreement with that country. To date, the IMF has never publicly cited a member country for currency manipulation. In the renegotiation of the North American Free Trade Agreement (NAFTA), the Trump Administration has identified combatting currency manipulation as a negotiating objective. In March 2018, the Administration announced that, through negotiating modifications to the U.S.-South Korea Free Trade Agreement (KORUS FTA), the Treasury Department was finalizing a side agreement on currency with South Korea. South Korea has periodically intervened in foreign exchange markets to weaken its currency. During the 2016 presidential campaign, combatting currency manipulation, particularly by China, was a key issue for Donald Trump. Since assuming office, President Trump has continued to express concerns about the exchange rate policies of other countries, although the Treasury Department has not formally labeled a country as a currency manipulator. There are a number of options for doing so, some of which Members have pursued through legislation. Lower-cost imports may benefit U.S. businesses that purchase inputs from abroad and U.S. consumers. Some analysts have argued that stricter international rules on currency manipulation could place constraints on U.S. monetary policy, because monetary policy can indirectly impact the value of the U.S. dollar against other currencies. 114-125 ). The 114 th Congress addressed currency manipulation through TPA and customs legislation.
Exchange rates are among the most important prices in the global economy. They affect the price of every country's imports and exports, as well as the value of every overseas investment. Over the past decade, some Members of Congress have been concerned that foreign countries are using exchange rate policies to gain an unfair trade advantage against other countries, or "manipulating" their currencies. Congressional concerns have focused on China's foreign exchange interventions over the past decade to weaken its currency against the U.S. dollar, although concerns have also been raised about a number of other countries pursuing similar policies.
At the heart of disagreements is whether or not countries are using policies to undermine free markets and intentionally push down the value of their currency. A weak currency makes exports cheaper to foreigners, which can lead to higher exports and job creation in the export sector. There can also be implications for other countries. From the U.S. perspective, U.S exporters and U.S. firms producing import-sensitive goods may find it harder to compete in global markets. However, U.S. consumers and U.S. businesses that rely on inputs from abroad may benefit when other countries have weak currencies, because imports may become less expensive. When foreign countries intervene in foreign exchange markets, it may also help lower U.S. borrowing costs.
Through the International Monetary Fund (IMF), countries have committed to avoiding currency manipulation. There are also provisions in U.S. law to address currency manipulation by other countries. The IMF has never cited a country for currency manipulation, and the U.S. Department of the Treasury has not done so since it last cited China in 1994. There are differing views on why. Some argue that countries have not engaged in policies that violate international commitments on exchange rates or triggered provisions in U.S. law relating to currency manipulation. Others argue that currency manipulation has occurred, but the provisions do not effectively respond to exchange rate disputes.
Legislation in the 114th Congress
The 114th Congress responded to concerns about currency manipulation through Trade Promotion Authority (TPA) and customs legislation. TPA legislation signed into law in June 2015 (P.L. 114-26) included, for the first time, principal negotiating objectives addressing currency manipulation in trade agreements. Currency manipulation was also addressed in the Trade Facilitation and Trade Enforcement Act of 2015 (P.L. 114-125). It enhanced Treasury reporting and bilateral engagement on exchange rate issues, and led to the creation of a new Treasury "monitoring list" on currency manipulation.
Recent Developments
During the 2016 presidential campaign, combatting currency manipulation, particularly by China, was a key issue for Donald Trump. Since assuming office, President Trump has continued to express concerns about the exchange rate policies of other countries, although the Treasury Department has not formally labeled a country as a currency manipulator. In the renegotiation of the North American Free Trade Agreement (NAFTA), the Trump Administration has identified combatting currency manipulation as a negotiating objective. In March 2018, the Administration announced that, through negotiating modifications to the U.S.-South Korea Free Trade Agreement (KORUS FTA), the Treasury Department was finalizing a side agreement on currency with South Korea.