Page 5 - WHAT IS FOREX (2)_Neat

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Their main job is to control monetary policy-meaning they manage

inflation, stabilize currency value, and keep the economy
balanced.Central banks do not trade for profit like normal traders.

They buy or sell currencies to influence exchange rates and keep

their country’s economy stable.

For example:

If inflation in Japan rises too fast, the Bank of Japan may sell
Japanese Yen to lower its value, making exports cheaper.

Or if the US Dollar weakens too much, the Federal Reserve might

take actions to support it through policy changes.

Even a single statement from a central bank can move the entire
Forex market within seconds-this is why traders always monitor

interest rate announcements and press conferences from these
institutions.

2. Commercial Banks

Commercial banks are the main liquidity providers in the Forex

market.They handle currency exchanges for clients, businesses,
and other institutions.These are the banks that actually execute

millions of Forex transactions every day-examples include
JPMorgan Chase, Citibank, Barclays, HSBC, and Deutsche Bank.

They earn from spreads and commissions, but they also hold
trading desks where professional traders speculate on price

movements to earn profits.