Adam D521 Evans#57

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What is central bank intervention in forex markets?

Central banks occasionally intervene directly in forex markets to influence currency values. For example, the Bank of Japan frequently sells yen to weaken it when it becomes too strong for exporters. Interventions may be unilateral or coordinated among multiple banks. They can cause violent short-term moves but rarely change long-term fundamentals unless policy shifts support them. Traders monitor intervention risk by following central bank statements and speculative positioning. While unpredictable, interventions are opportunities for short-term traders but hazards for those caught on the wrong side. Understanding central bank behavior is essential in macro forex trading.