What is the role of the central bank in foreign exchange trading?

1. Foreign exchange trading is the prediction of future exchange rate prices, that is, the price comparison of two currencies.

2. Interest rate is a direct expression of the value of a currency.

3. A country’s interest rate is set by the country’s central bank.

Now you understand the role of the central bank in foreign exchange transactions.

Of course, the central bank cannot adjust interest rates at will. It must adjust interest rates according to its own national conditions. For example, when domestic inflationary pressure is high, it must raise interest rates to stimulate savings and curb consumption, thereby alleviating inflationary pressure.

Just because the central bank cannot adjust interest rates at will does not mean that the central bank has no influence. As long as the central bank spokesperson or governor or something comes out and makes a statement to reveal a little bit of interest rate hikes or interest rate cuts, whether it is true or false, There will be great fluctuations in the foreign exchange market, and the central banks of Japan and Switzerland like to do this kind of thing. Often the Japanese yen rises well and then suddenly falls sharply. When I look back, I see that some devil from the central bank has spoken again.