In plain English
What Currency intervention means
Intervention usually means official trades in the foreign-exchange market. The authority may buy its own currency to support it, or sell it to weaken it, depending on the policy goal. Intervention can be unilateral or coordinated with other authorities, and it may be sterilized or unsterilized.
Why it matters
Intervention can affect liquidity, volatility, and market expectations. It is one of several tools authorities may use alongside interest rates and communication, but it does not guarantee a lasting exchange-rate outcome.
Example
If a currency is falling rapidly, the central bank may sell foreign reserves and buy the domestic currency to slow the move. The effect may be temporary if market pressure remains strong. Simplified example.
Quick answers
Common questions
Does intervention always change the exchange rate?+
No. It may move the market, but the effect can be small, short-lived, or overwhelmed by broader forces.
Is intervention the same as setting policy rates?+
No. Interest-rate policy and FX intervention are different tools, though they can interact.
Sources