In the forex market we have different participants. All of the participant have different roles to play in the fx market. Variety of participant in the fx market are the:
- Inter bank
- Hedge funds
- Major corporations
- Institutional investors
- Fx market makers
The inter banks are large forex players, they are the world different banks. They are the heart of the forex market. They buy and trade huge sum of currency 24 hours. Individuals no matter how large they are cannot be large forex players. The inter banks apart from being known as the heart of forex market; they consist of major commercial bank. They are all Buying and selling amongst each other. Based on the credit relationships built with counter party banks, they deal directly with each other at a tight spread.
Forex Market Structure
The central banks
Central bank is the primary authority of a nation concerned with money policy. The central bank is responsible to determine a country’s interest rate.
Popular central bank in forex.
- United State – Federal Reserve Board
- European Monetary Union – European Central Bank
- United Kingdom – Bank of England
- Switzerland – Swiss National Bank
- Japan – Bank of Japan
- Australia – Reserve Bank Australia
- New Zealand – Reserve Bank of New Zealand
Central Bank Interventions
Sometimes banks enter the forex market to force exchange rate in favor of their country. Currency strengthens to add value to export goods. Banks buys from the open market and add value to the currency. The country’s export is now sold for an expensive price.