On the forex market, central banks represent their nation's government. Currency rates are heavily influenced by open market operations and interest rate policies of central banks.

The price of a currency's native currency is fixed by the central bank. The open market price of its currency will be determined by the exchange rate regime. There are three types of exchange rate regimes: floating, fixed, and pegged.

Central banks are the financial institutions that manage a country's monetary policy. They typically have a monopoly on the production of banknotes and coins in their jurisdiction. Central banks also act as bankers to the government, and regulate the banking sector. The primary purpose of a central bank is to maintain price stability, while also promoting sustainable economic growth.