When the U.S. enters into free-trade agreements, are there any rules prohibiting manipulation of foreign exchange rates?

BY Paul Solman  January 2, 2008 at 10:31 AM EST

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.