Central Bank

A central bank is a national bank that plays a vital role in the currency markets not only because it provides financial and banking services for its country’s government and commercial banking system, but also implements the government’s monetary policy and issues currency. A central bank directs toward influencing the money supply, which in turn affects demand and price of the currency. By implementing different monetary policies, central banks can regulate economic activities and manipulate the markets over time to maintain their currencies’ values. Some countries and their central banks try to beg their currency to that of another currency, like USD, at a fixed exchange rate so that their currencies would rise and fall along with the dollar.
The central bank can participate in the foreign exchange market by buying and selling its currency at the spot market to prevent its value from changing too much. Also, central banks can keep the local currency at a specific price to attract more international trade.