If you are wondering who controls the forex market, read this. There are many different types of participants in the foreign exchange market. There are international institutions, retail investors, and hedge funds. While there is no single organization that rules the forex market, both commercial banks and central banks have significant influence over the market. For example, a hedge fund buying EUR/USD at market pricing would cause it to rise. The currency pair would fall if the hedge fund sold the EUR/USD at the same market pricing.
Central banks control the forex market in large part, and they can alter exchange rates and set up currency exchange rates. Although they start out with a much smaller trading volume than interbank, they are able to make major changes in the currency exchange rates through many conferences of different currencies. This is where the biggest role of a central bank comes in. In addition to the central banks, other major players in the forex market include commercial banks and large trading firms.
Large commercial banks are the primary participants in the forex market. These institutions execute orders from other parties, including insurance and pension funds. Some investment banks engage in trading activities for their own benefit. In fact, the largest banks have daily turnovers of several billions of dollars. Most of these banks gain their primary profit through currency speculation. In addition, brokerage houses serve as vital links between different financial institutions. However, the vast majority of forex traders use retail traders.