Study On The International Legal Issues Of Currency Manipulation

Exchange rate is the value of the money of one country compared to that of another country. It has great impact on the international economic activities. While exchange rate is the domestic affaire pertaining to financial sovereignty, it is far beyond the control of one country in the era of the financial globalization. It is necessary to cooperate and maintain the stability of the international exchange rate system for the increasing intimacy of the international economic contact. It is the exact aim of the International Monetary Fund Agreement ("IMF Agreement").Each member country shall have the right to choose exchange rate arrangements and to determine as well as manage the exchange rate of its own. However, each member country shall agree to comply with the obligations according to the IMF agreement, among which is to avoid manipulating exchange rates to prevent effective balance-of-payments adjustment or to gain an unfair competitive advantage over other countries. It is forbidden to manipulate exchange rate in accordance with the IMF agreement. The question is while the new decision of 2007 is published, the definition and scope of the exchange rate manipulation maintains unclear.With the rapid economic development of China, the exchange rate of Renminbi ("RMB") has become a hot topic. China was accused of manipulating the exchange rate by fixing its value on US dollars to keep a low exchange rate for advantage in the international trade. Many groups of the United States urge American government to start the proceeding for the "301" survey, to terminate China's most-favored nation treatment and challenge China to the WTO dispute settlement. Therefore, it is necessary to fully understand the concept and the fundamental knowledge of the exchange rate manipulation. For instance, what exactly constitutes exchange rate manipulation? What is the standard of exchange rate manipulation? Does WTO or IMF have the jurisdiction of the exchange rate manipulation? What is the relationship between currency manipulation and subsidies? Would Chinese exchange rate system be regarded as currency manipulation? Is it a true proposition that exchange rate manipulation is subsidy? These questions are significant for further discussion.This dissertation focuses on the above issues. Besides the preface and conclusion, it is composed of four chapters as follows: Chapter One discusses jurisdiction of the exchange rate manipulation, the judicial basis of the jurisdiction of the WTO and IMF and the differences between the two organizations.Chapter Two discusses the elements which constitute the exchange rate manipulation. Then further discuss the allegation that the manipulation of RMB is one kind of subsidies according to the "301" survey of the United States.Chapter Three is the personal review of the manipulation of RMB as subsidy according to the "301" survey of the America.Chapter Four starts with a brief introduction of RMB evolution progress and expounds on the relationship between RMB and currency manipulation afterwards. Latter summarize the main measures of the reformation of the RMB exchange rate. The last part is the formation of the capital account and RMB exchange rate scheme.