In the fall of 2007, when the U.S. economy first seemed in peril, I began answering reader queries here on the Business Desk. I still do so occasionally, but this page has expanded to include posts from eminent economists, "far-flung correspondents," and a variety of voices that have intriguing and/or useful things to say about economics, broadly defined. Please feel encouraged to respond to any and all of them.
When the U.S. enters into free-trade agreements, are there any rules prohibiting manipulation of foreign exchange rates?
City & State:
Question/Comment: When the U.S. enters into free-trade agreements, are there any rules prohibiting manipulation of foreign exchange rates? I thought the purpose of floating rates set by the market was to adjust for imbalances in trade. Obviously, that is not working now.
Paul Solman: There are no rules that I'm aware of. And yes, the purpose is to adjust for imbalances of trade. The argument is that by manipulating currency rates, the Chinese in particular are keeping those adjustments at bay.