Set out why central banks or governments intervene in currency markets or impose capital controls, and how well such measures work

Authorities intervene or impose capital controls to damp volatility, resist appreciation that hurts exporters, defend a peg, or slow hot money flows and asset bubbles. In large developed markets intervention rarely has lasting effect, because daily turnover dwarfs reserves. Emerging economies have better odds, since their markets are smaller relative to reserves and many hold large buffers. Selling reserves to defend a weak currency is limited by the reserve stock; buying foreign currency to resist appreciation is limited by sterilisation costs and inflation risk. Capital controls can be a legitimate temporary tool against inflow surges but distort allocation and erode as investors evade them. The trap is assuming large reserves make any peg defensible.