Central bank intervention

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Central bank intervention

The buying or selling of currency, foreign or domestic, by central banks in order to influence market conditions or exchange rate movements.

Central Bank Intervention

The practice in which a central bank buys and sells one or more currencies in order to affect the exchange rate of its own currency. To give a very simple example, if a central bank believes its own currency is overvalued it may sell that currency on the open market to increase supply. The extra supply will likely drive down the exchange rate to a lower level.
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Most of the speakers, Geithner among them, painted a dark picture of the global economy, in light of income inequality, changing demographics and growing reliance on central bank interventions," Baldwin said.
In 2015, "like the last seven years, it is the central bank interventions which will have an influence over the markets," said Romain Boscher, a stock portfolio manager at Amundi.
Moreover, most central bank interventions are conducted silently, even though a minority of industrialized countries provides intervention data ex post.
If state central bank interventions across Europe had not taken place to artificially pump up the asset bases of structurally significant banks in every country in Europe, then the New Year would have seen a continent-wide domino collapse of banks which would have without doubt crashed into all of the UK banks.
Bailout tricks and clever central bank interventions were supposed to calm nervous markets.
Russia was then able to save the ruble from outright collapse through central bank interventions that relied on cash saved from years when prices on its oil and natural gas exports were high.
The technicalities of Asian Central Bank interventions aside, the underlying story is that these banks and oil rich countries are losing their appetite for the US dollar; if they didn't, they'd keep their dollars and not recycle them.
The currency held stable in the past two months at around 215 to the greenback, aided by Central Bank interventions.
It is hard to distinguish such a proposed purchase from central bank interventions to stabilize currency rates,'' he said.
Central bank interventions by European and US institutions and eventual interest hikes are anticipated, resulting in one-half to one full percentage point increases in Europe.
We expect, therefore, to see continued growth in the managed futures industry as fees decline, correlations among asset classes continue to break down, and the influence of central bank interventions on legitimate price discovery wanes," said Summit participant Rick Harig, Partner, Efficient Capital Management.
These short central bank interventions serve only to assure that in a crisis situation the system of liquidity provision functions in an orderly manner," he told the newspaper.

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