There are several players on the Forex and they all play a role on the markets. One of these main players in the Forex Market are the national central banks who ultimately control the monetary supply and have either an official or unofficial target rates for the currencies they control. Many of these central banks usually have a vast foreign exchange reserves and they have significant powers including interventions.

The central banks have a lot of responsibilities, one of the most important of which is the restoration of an orderly market in times of highly active exchange rate unpredictability. They can also take firm control over the currency if there is a potential for inflation that can go out of bounds resulting to a very weak currency.

Those who trade in the Forex frequently look to the actions of a particular central bank when the currency of a particular country weakens. Traders who ride on a strong currency pray that the central banks would act soon so they do not lose more money. In fact, the aggressive intervention of the central bank is expected. If the central bank does not intervene, the impact on the short term supply and demand balance may lead to catastrophe that could have a ripple effect on other currencies as well. The intervention will not only control the balance but it will stop potential economic disasters.

Sometimes, however, the central bank may not be able to achieve their primary objectives. Sometimes, no matter what they do or maybe they acted too late, the inflation soars and the currencies get too weak. When this happens, it will be the other participants within the Forex trading that will help out. The combination of the other players can overwhelm a central bank and this could lead to incidents similar to the 1997 collapse of the European Exchange Rate Mechanism which was felt throughout South East Asia. It took more than ten years for these countries to recover, in fact, some were just on the first stages of recovery when the economic depression that hit the US two years ago occurred.