How Central Banks Use Foreign Exchange Intervention

Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates · May 25, 2026 · 9m · transcript

Episode 11 of Monetary Policy Explained with Fexingo digs into foreign exchange intervention — when central banks directly buy or sell their currency to influence the exchange rate. Lucas and Luna break down the mechanics using the Bank of Japan's 2022 yen-buying spree as a concrete case. They walk through how the BOJ sold U.S. Treasuries to raise dollars, then sold those dollars for yen, all to prop up a sliding currency. They compare sterilized versus unsterilized intervention, explain why the Fed rarely intervenes while emerging-market central banks do it constantly, and unpack the…