Where do governments get the money to manipulate and control their currencies?
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There are two parts to this: the value of the currency at home (ie. how much your shopping, housing, etc. costs), and the value against other currencies (ie. for imports, exports and investments).
The first one is the simplest, at the basic level: governments have the power to create or destroy their own currency. If the UK government really wanted to, it could double the number of pounds in circulation. That would cause a load of problems, but it has the legal power to do that.
In fact, most governments actually give private banks this power. When a bank loans money it creates money. This is regulated and influenced by the central bank (the Federal Reserve in the US, the Bank of England here, the European Central Bank, etc.). When you hear “the central bank is raising the interest rate…” one of the things this is meant to do is reduce the number of loans made, which means less money is created.
The reason it’s done this way is that private banks are believed to be better at responding to conditions in the economy and supplying the right amount of money.
There is one big exception to this. “Quantitative easing” that was introduced in many countries after the financial crisis actually did involve central banks directly creating lots of money, in a rather complicated way.
(This isn’t the only way of looking at things, for example, “Modern Monetary Theory” views government spending as creating money and taxes as destroying it.)
This kind of manipulation is mostly aimed at the domestic economy (with the US being a bit of an exception here). However let’s say I’m the Russian government, I see the value of the ruble falling against other currencies, when I want to keep it stable. One way to do that is to use other currencies to buy rubles. To do that, countries have currency reserves (and also gold reserves).
Obviously the Russian government can’t print dollars or yuan or euros like it can rubles. (Although North Korea apparently does forge a lot of dollars.) So where does it get its currency reserves from?
The can come from either from taxing exporters when they earn money in a foreign currency, from buying foreign currencies directly (ie. “I’ll sell you a billion rubles for 10 million dollars”), or from government-owned industries earning foreign currencies directly (eg. a state-owned oil company selling oil abroad).
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