1, the role of foreign exchange reserves
An increase in the exchange rate of reserve currency will increase its real value, while a decrease in the exchange rate of reserve currency will decrease its real value. Foreign exchange reserve is actually an international purchasing power reserve. Because today's international reserve currencies, whether US dollars, German marks or British pounds, cannot be converted into gold, but can only be converted into other foreign currencies to realize their international purchasing power. In fact, reserve currency is still a symbol of value, and its real value can only be determined by its actual purchasing power in the international market. If the real value of foreign exchange reserves decreases and the currency exchange rate falls, the countries that reserve the currency will suffer losses, while the issuing countries of the reserve currency will benefit greatly from the devaluation caused by reducing the debt burden.
2, the relationship between foreign exchange reserves and exchange rate:
Foreign exchange reserves are closely related to foreign exchange. The increase of foreign exchange reserves is equivalent to the increase of purchasing power of domestic currency, which leads to the increase of demand for domestic currency. According to the relationship between supply and demand, the domestic currency will appreciate. From the perspective of monetary policy, the increase in foreign exchange reserves means that the central bank of the country has purchased a large number of foreign assets, which has led to excess market liquidity and raised the local currency interest rate, thus strengthening the local currency in the foreign exchange market.
The fluctuation of local currency exchange rate will directly affect the increase or decrease of foreign exchange reserves. Generally speaking, a country's currency exchange rate is stable, and foreign investors can obtain interest and dividend income stably, which is conducive to the investment of international capital and thus to the growth of the country's foreign exchange reserves. On the contrary, the instability of local currency exchange rate will lead to capital outflow and reduce the country's foreign exchange reserves. At the same time, when a country's export value increases and its import value exceeds its export value due to the devaluation of its currency, its foreign exchange income will increase and its foreign exchange reserves will increase relatively. On the contrary, the fact is just the opposite.
3. Influencing factors of foreign exchange reserves
The scale of foreign exchange reserves is closely related to GDP growth rate, exchange rate, current account balance, capital account balance and the role of foreign direct investment. GDP growth rate, current account balance, capital account balance and foreign direct investment all have positive effects on China's foreign exchange reserves. Under the direct quotation method, the exchange rate has a negative impact on the scale of foreign exchange reserves. This is consistent with the economic situation of China in different periods. From 2006 to 20 14, China's economic scale continued to expand, and a large amount of foreign exchange funds flowed into the current account and capital account surplus. The government has strengthened the policy of introducing foreign capital, which has continuously expanded the scale of foreign exchange reserves. At the same time, China's exchange rate dropped from US$ 80,504 to US$ 665,438 +0.370, and the scale of foreign exchange reserves also increased rapidly from US$ 857.9 billion to US$ 3,847.7 billion. Since 20 15, China's GDP growth rate has gradually slowed down, the scale of attracting foreign direct investment has been basically stable, and foreign direct investment has continued to grow. China enterprises carry out large-scale overseas mergers and acquisitions, and their foreign direct investment exceeds that of foreign direct investment. Overseas mergers and acquisitions will also lead to corresponding capital outflows and exchange rate fluctuations, leading to a downward trend in foreign exchange reserves.