Central bank Intervention is an important tool that central banks can use to influence the economy. By buying or selling its currency in the foreign exchange market, a central bank can raise or lower the value of its currency relative to other currencies. This can have a variety of effects on the economy, depending on what is causing the change in value.If a country's currency is weak relative to others, it means that goods and services in that country are relatively expensive compared to other countries. This makes it more difficult for companies in that country to export goods and services, which can lead to fewer jobs and slower economic growth. In order to combat this, a central bank may intervene by buying up its own currency, which will make it stronger relative to others and make exports more competitive.Conversely, if a country's currency is strong relative to others, it means that goods and services in that country are relatively cheap compared to other countries. This makes it easier for companies in that country import goods and services from abroad, which can lead to increased competition and higher prices for consumers. In order to prevent this from happening, a central bank may intervene to sell off its own currency,which will make it weaker relative to others and make imports more expensive.
