Basu, Kaushik2014-02-032014-02-032013-09https://hdl.handle.net/10986/16835A frequent charge in foreign exchange markets in developing countries is that of manipulators being at work. Since to buy is to raise prices and to sell is to lower prices, the question that naturally arises is whether the widespread charge of market manipulation is valid. The paper shows that (whether or not "widespreadness" has any merit) it is possible for a player to manipulate and profiteer. By using some simple principles of game theory, the paper outlines a strategy that a manipulator may use. The aim of this paper is not to provide a manual for the manipulator but to enable the regulator to understand the art and develop policies to curb manipulation.en-USCC BY 3.0 IGOAUCTIONSCENTRAL BANKCENTRAL BANKSCLARITYCOLLATERALCOMPETITIVE MARKETSCONDITIONAL SALECONTINUOUS AUCTIONSCURRENCYCURRENCY DEPRECIATIONDEMAND FUNCTIONDEPRECIATIONSDERIVATIVESDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDOMESTIC CURRENCYDOMESTIC MARKETDUOPOLYEMERGING ECONOMIESEMERGING MARKETEMERGING MARKET ECONOMIESEQUILIBRIAEQUILIBRIUMEQUILIBRIUM BEHAVIOREQUILIBRIUM PRICEEQUILIBRIUM PRICESEXCHANGE RATEEXCHANGE RATE FLUCTUATIONSEXCHANGE RATE MOVEMENTSEXCHANGE RATESFINANCIAL INSTITUTIONSFINANCIAL STUDIESFOREIGN CURRENCYFOREIGN EXCHANGEFOREIGN EXCHANGE MARKETFOREIGN EXCHANGE MARKETSFOREIGN EXCHANGE RESERVESFOREIGN EXCHANGE RISKFORWARD MARKETSFUTURESFUTURES MARKETSGAME THEORYINSIDER TRADINGINTEREST RATESINTERNATIONAL BANKINTERNATIONAL ECONOMICSMARKET ECONOMIESMARKET MANIPULATIONMARKET PLAYERSMARKET POWERMARKET PRICEMARKET REGULATORSMARKET STRUCTUREMONOPOLYNASH EQUILIBRIUMOLIGOPOLYPRICE CHANGEPRICE LEVELPRICE MOVEMENTSREGULATORREGULATORSSALESTOCK MARKETSUPPLY FUNCTIONSTREASURIESUNCERTAINTYWEALTHWorld Bank10.1596/1813-9450-6608