Central Bank Intervention in the Markets

The main banks play a large and active role in the markets that are those of foreign exchange, or forex.

They have different motives to their actions from the other playeres in the market, as they do not do it to make profits - the most profound change there can be really!

They often act in the markets in order to protect a particular currency, and sometimes they even do this knowing that they have a good chance of making a loss as a result.

There are also different attitudes within countries with regard their currency. Some like to see it quite strong all the time and have a steady value.

However countries for which exports is particularly important might actually be quite pleased to see devaluations occur to their currency, because clearly this makes their exports a lot more attractive to foreign sources as they get more bang for their buck, as it were.

Risk and Foreign Exchange
Strong form of Market Efficiency
Is exchange rate forecasting successful
Weak Market Efficiency
Operating or Economic Risk

Central Bank Intervention in the Markets

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