Foreign exchange reserves,
Definition of Foreign exchange reserves:
Total of a countrys gold holdings and convertible foreign currencies held in its banks, plus special drawing rights (SDR) and exchange reserve balances with the International Monetary Fund (IMF).
Foreign exchange reserves are assets held on reserve by a central bank in foreign currencies. These reserves are used to back liabilities and influence monetary policy. It includes any foreign money held by a central bank, such as the U.S. Federal Reserve Bank.
Foreign exchange reserves can include banknotes, deposits, bonds, treasury bills and other government securities. These assets serve many purposes but are most significantly held to ensure that a central government agency has backup funds if their national currency rapidly devalues or becomes all together insolvent.
How to use Foreign exchange reserves in a sentence?
- These may include foreign currencies, bonds, treasury bills, and other government securities.
- Foreign exchange reserves are assets denominated in a foreign currency that are held by a central bank.
- Most foreign exchange reserves are held in U.S. dollars, with China being the largest foreign currency reserve holder in the world.
- Economists suggest that it’s best to hold foreign exchange reserves in a currency that is not directly connected to the country’s own currency.
Meaning of Foreign exchange reserves & Foreign exchange reserves Definition