How does a central bank control the foreign exchange market FOREX? -

There really is no single unified foreign exchange market that is controlled by any central bank. However, there are main trading centers in London, New York and Tokyo as well as some smaller centers throughout the world, but these do not quot;controlquot; FX. Instead, the FX market is controlled by, well the market itself. This is mainly due to the over-the-counter nature of the FX and the little, if any (arguably) insider information available. The reason they want to is to make money Government manipulate the value of there currency for many reasons the main one is foreign trade. Example An American company makes a product and sends it to china to sell it. If the American dollar is stronger(more valuable) then the Chinese dollar then the Chinese people have to use more of their money to buy an American product meaning the American company will sell less of those products When that same company sends their product to England where the American dollar is weaker then it is cheaper for the English people to buy American products. So the dollars are manipulated from time to time to increase commerce. Other reasons are Political in nature and alot more complicated to explain I hope i Have help you alittle