Foreign exchange reserves

Backgrounds Narrowly defined foreign exchange reserves refer to the foreign exchange part of the international reserve assets held by a government. Its manifestations include deposits held by the government in foreign banks, foreign treasury bonds, short-term and long-term bonds and other assets. Dollar, Euro and Pound are the main reserve currencies. Broad foreign exchange reserves also include reserve assets such as gold reserves and special drawing rights (SDRs). At the same time, foreign exchange reserves are also an important part of a country's liquidity. It is also an important means for a country to balance its balance of payments, intervene in the foreign exchange market, repay foreign debts and raise its financing…

growth. This led to an economic crisis in India in 1991 as foreign exchange reserves dipped. Banks were unwilling to give loans to new people and cash outflow from India started occurring at a rapid rate. The Old Economic policy was focused on protecting the domestic producers. They were restrictions on import, high import duties in order…

Reasons for Chinese devaluation  The currency is one of the only determinant of the exports of the country . With the devaluation of the currency is a desperate attempt to make the exports competitive in the world market. For 30 years china has been growing its exports on the back of low wages and a large working age population which it transports from villages to the cities on favourable terms. However , with consequences of the one child policy of 1979 taking stage the proportion of the…

166), Zimbabwe need to reform some of the things: in order to avoid hyperinflation. They need to conduct a public expenditure reform by reducing the public sector wage bill, eliminating subsidies and reduce transfers. They need to do it by protecting the share of public investment. However, they also need to conduct tax reform. Zimbabwe needs to reduce or simplify its tax administration system. Lastly, they require creating an enabling business environment since their business regulations are…

Obviously, the main currencies used in ASEAN are US dollar, Euro, UK pound, and the Japanese yen. This section shows the comparison of those currencies to RMB in recent years. As mentioned earlier, the most important currency for ASEAN is US dollar. There are several reasons behind this. First, ASEAN’s currencies were originally fixed to US dollar since the countries would like to import macroeconomic stability from US dollar. With the mismanaged U.S. monetary policy, ASEAN countries would like…

The Reserve Bank Board meets eleven times per year (around once a month, except January). Minutes are publically available around two weeks post meeting. Statement on Monetary Policy Practitioners who wish to better understand RBA’s assessment of current economic conditions can access RBA’s Statement on Monetary Policy (http://www.rba.gov.au/publications/smp/), which is published four times each year. The Statement on Monetary Policy assess the economy from both the domestic and international…

In South Africa, their exchange rate system is set up as floating system. Essentially the rand exchange rate will be determined by the market. Similar to other systems, the Reserve Bank can influence the rate by buying and selling in the foreign exchange market, yet they typically try not to intervene with the market aside from building up foreign exchange reserves (although the Reserve Bank says this is to manage liquidity and not to influence the exchange rate) (Resbank). There has been…

currency with that of a foreign currency. Dollarization has occurred in several countries including, but not limited to, Panama, El Salvador, and Ecuador. For countries with volatile currencies, dollarization offers them the ability to stabilize their economy. While dollarization has its pros, it is not without its cons, and for Ecuador, this is no exception. In my initial discussion, I believed that dollarization was a positive move for Ecuador; I still feel this way, and now that I have gained…

By the 1960s there was a surplus of the U.S. dollars caused by foreign aid, military spending, and foreign investment which threatened the Bretton Woods system, because the United States did not have enough gold to cover the volume of money in the worldwide circulation at the $35 per ounce exchange rate (Office of the Historian, n.d.). Traders in foreign exchange markets became increasingly inclined to sell dollars based on their belief that the dollars overvaluation would one day compel the…

A reserve currency is a name of the currency that is held in necessary quantities in many institution and governments across the world. This is usually used in most of the international transaction and has an exchange rate for each country through which the business is done. It offers an opportunity for the people living in countries that use the currency to purchase goods more cheaply without having to undergo extra cost as it is the case for other nations. The US dollar is known to be the…