What Does It Mean To 'Manage' A Currency?

by: Scott Sumner

Commenter Matthew McOsker made this attempt:

I think the definition is simple where one country consciously manages the value of their domestic country against a foreign country.

What does it mean to "manage" the value of a currency? If you mean "enact government policies that impact the exchange rate", then all countries are guilty. If you mean enact government policies with the intention of affecting the exchange rate, then does it matter if that's the sole purpose, or just one of many channels? Didn't Bernanke mention exchange rates as one channel by which QE could affect the US economy? Some people argue that Japan's recent adoption of negative IOR was (among other things) aimed at depreciating the yen. But they had no specific exchange rate peg, and the yen continues to move up and down each day. It probably wasn't aimed at boosting the current account balance, but rather boosting prices and GDP. Is that currency manipulation?

People are going to need to be much more specific if they intend to convince me that there is a coherent definition out there.