Market Manipulation
Market manipulation: describes a deliberate attempt to interfere with the free and fair operation of the market and to create artificial, false or deceptive appearances with respect to the price of, or in the market of, securities, commodities or currencies.

What is market manipulation?

Market manipulation refers to the action of artificially inflating or deflating the price of a security or otherwise influencing market behavior for personal gain. Tampering is illegal in most cases, but can be difficult for regulators and other authorities to detect, as has been the case in many cases.

Manipulation is also difficult for manipulators as the size and number of market participants increases. For example, it is much easier to manipulate the price of a cryptocurrency when 90% is in the hands of 8% of the people.

Tampering is usually difficult to detect, but it is also difficult for the manipulator as the market size and number of participants increases.

Two common types of stock manipulation are the “pump and dumb” and the “poop and scoop.”

In the more regulated markets such as the securities and futures markets, manipulation is prohibited and prosecuted and can lead to legal consequences for manipulators..

Currency manipulation is the deliberate devaluation of a nation’s currency by a government.

Forms of currency manipulation

Currency manipulation is a slightly different kind of market manipulation, as only central banks and national governments can participate in it, and these are legal authorities themselves. Being the owner of a fiat (government backed) currency legitimizes many of the actions these governments take to suppress or inflate the value of their currency compared to its peers. Although currency manipulation is not illegal, a country that is manipulating its currency can be indicted by other nations or punished with sanctions approved by its trading partners.

In addition, international bodies such as the World Trade Organization (WTO) have been encouraged to play a more prominent role in addressing allegations of currency manipulation.

Currency manipulation example

On August 5, 2019, the People’s Bank of China set the daily benchmark rate of the yuan below 7 per dollar for the first time in more than a decade. This measure, in response to the new 10% tariffs on $ 300 billion in Chinese imports imposed by the Trump administration, took effect on September 1, 2019. World markets fell due to this measure, including in the United States, where the DJIA lost 2.9% on the worst day of 2019 to date. As a result, the Trump administration branded China a currency manipulator.

Another country that has had a history of currency manipulation is Japan. Because it is a country that depends on its exports, on some occasions when the yen has appreciated strongly against the dollar, the Bank of Japan has intervened in the foreign exchange market to reduce the value of its currency and make Japanese exports are more attractive.
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