Central bank

Central bank
This bank plays an important role in the financial markets due to their power over the economic policy. It has a direct effect over supply of money, which affects demand and cost of currency. By using various policies, this bank manipulates the markets for keeping their finance at certain levels. There are certain countries and central banks which try to hook their money to another currency or group of currencies. This bank participates in the Forex trading market by purchasing and selling their money at the market to make sure that they are not changed.Anotherinspirationis to maintain thelocal finance at a certain cost for making it attractive for trading. If the currency of a country appreciates too fast, it could make it less attractive to the importers. You should keep in mind that there are several transactions that use local currency. Therefore, if the currency rises quickly, it makes the items very costly which affects the trade. To manage this situation, Central Bank has the right to interfere in market by marketing the money and purchasing important currencies.