The International Monetary Fund (IMF) releases a report each year detailing its assessment of monetary policies globally and identifying imbalances affecting global growth.
Discrepancies as to how currencies are valued has been a focal point for President Trump, as various countries have been tagged as currency manipulators by the administration. The IMF has concurred with such complaints and has drafted policies to strictly enforce currency valuation policies. China, Germany, and Japan have been accused by the administration of devaluing their currencies in order to boost their exports at the disadvantage of U.S. companies.
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The most significant misalignments have been found in emerging market currencies whose countries benefit when their currencies devalue, making their exports more competitive worldwide.
In line with President Trump’s suggestion that the U.S. dollar is overvalued, the IMF estimates that the dollar is 15% overvalued relative to other currencies, meaning that U.S. products are less competitive globally. Saudi Arabia’s currency is also estimated to be overvalued by 20%, partly because it is pegged to the U.S. dollar.
South Korea, Singapore, and Mexico currently have the most undervalued currencies, giving them a direct trade advantage over other countries.
Source: IMF External Sector Report 2017