What are forex reserves?

[PIPruit]

I read about forex reserves somewhere, does anyone know what are forex reserves?

 

[Gakree]

The basic terms have tremendous significance.
It's great that you want to get to grips with it all.

 

[Arafx]

I read about forex reserves somewhere, does anyone know what are forex reserves?

Forex reserves are foreign currency deposits held by a country's central bank or monetary authority. Forex reserves are used to support the country's currency and maintain the exchange rate stability by buying or selling foreign currencies. The reserves can also be used to pay for imports, service foreign debt, or provide liquidity in times of crisis. Forex reserves typically include major currencies such as the US dollar, euro, and yen, as well as gold and other assets.

 

[Komondar]

Forex reserves are foreign currencies and other assets held by a country's central bank to support its currency's stability and international trade.

 

[ArnavDeshmukh]

I read about forex reserves somewhere, does anyone know what are forex reserves?

They are assets held by a central bank or monetary authority in various foreign currencies.

 

[eleanorkim]

I read about forex reserves somewhere, does anyone know what are forex reserves?

Sure thing, buddy! Forex reserves are like a country's stash of foreign currencies held by their central bank. They're there to keep things stable, make international trade smoother, and help with managing monetary policies

 

[ImogenBeaumont]

they are assets held by a country's central bank or monetary authority in various foreign currencies.

 

[ficko91]

Forex reserves are foreign currencies held by a country's central bank to support its international transactions and stabilize its currency value

 

[Dushan]

Forex reserves are assets held by a country's central bank or monetary authority.

 

[Robert_Johnson]

Forex reserves, or foreign exchange reserves, are the holdings of a specific central bank in foreign currencies. Central banks use their foreign currency reserves in times of crisis, such as when the national currency is exposed to losing a lot of its value due to hyperinflation. Countries that peg their exchange rate usually use their foreign currency reserves to do so, as they need to maintain that artificial price.

Central banks use their foreign currency reserves for various reasons. Even when central banks do not peg their currency to another currency, they often try to keep the value of their local currencies low in comparison with international reserves currencies. They do so with the assumption that it makes their products cheaper for other countries to buy, which would make them more competitive and increase exports.

Having currency reserves also helps the country, as in times of low exports companies may be short on foreign currencies, and thus the central bank can provide it to fund needed imports.

In essence, the foreign reserves of a central bank help mostly in times of dire economic conditions. In case of political instability or in times of natural disasters or any other conditions, it is common for foreign capital to leave the country. Thus, the foreign reserves the central bank holds play a key role in maintaining currency stability. Central banks often hold gold reserves in addition to foreign currency reserves due to its intrinsic value.

Central banks who implement a fixed exchange rate policy, (i.e. they peg the value of their currency to another currency such as the US dollar), such as those of Cuba and Eritrea usually use more of their foreign exchange resources to be able to maintain this peg. Central banks who use a floating rate system, in which they let the exchange rate be determined by supply and demand factors, often only intervene when necessary and thus use their foreign reserves less for that purpose.

Nice explanation. Thanks for sharing, dude.

 

[Lavat]

Forex reserves are like a country's savings in different foreign currencies. It helps the country deal with international money matters and handle economic problems. These reserves, often in the form of bonds or gold, are important for keeping the country's currency stable and secure during tough times.