foreign exchange intervention

Foreign exchange intervention occurs when a country's central bank actively buys or sells its own currency in the foreign exchange market. The goal is to influence the currency’s value—either to prevent excessive appreciation or depreciation, stabilize the economy, or support export competitiveness. For example, if a country's currency is too strong, making exports more expensive and less competitive internationally, the central bank might sell its own currency to lower its value. Conversely, if the currency is too weak, the bank might buy its own currency to help strengthen it. This intervention allows governments to manage economic stability indirectly through currency regulation.