Central banks are really important when it comes to managing exchange rates. Here’s how they do it:
Intervention: Sometimes, they buy or sell their own currency. This helps keep its value steady.
Interest Rates: Changing interest rates can impact how much money people want to invest, which can also change exchange rates.
Policy Signals: What central banks say can change what people think will happen in the market.
In short, by keeping things steady, central banks help make international trade smoother. This is very important for a country's economy.
Central banks are really important when it comes to managing exchange rates. Here’s how they do it:
Intervention: Sometimes, they buy or sell their own currency. This helps keep its value steady.
Interest Rates: Changing interest rates can impact how much money people want to invest, which can also change exchange rates.
Policy Signals: What central banks say can change what people think will happen in the market.
In short, by keeping things steady, central banks help make international trade smoother. This is very important for a country's economy.