Central Bank Intervention

The buying or selling of its currency by a central bank in the foreign exchange market to influence its exchange rate. A country's government or central bank may be concerned that its currency is trading at too high or too low a level and feel obliged to intervene. Central banks also undertake so-called verbal intervention in which bank officials make remarks that markets are intended to interpret as supporting or weakening their currency's exchange rate. Verbal intervention is more common than actually buying or selling currency.