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Why does a decrease in non-saving foreign exchange mean an increase in domestic demand?

What is non-savings foreign exchange?

Why does a decrease in non-saving foreign exchange mean an increase in domestic demand?

This is the first time I heard about non-savings foreign exchange.

First, let’s look at the definition of foreign exchange: Foreign exchange is a payment voucher expressed in foreign currency for international settlement.

The International Monetary Fund’s explanation of foreign exchange is: Foreign exchange is the international currency held by monetary administrative authorities (central banks, monetary institutions, foreign exchange stabilization funds and the Ministry of Finance) in the form of bank deposits, Treasury bills, long-term and short-term government securities, etc.

Debt that can be used when the balance of payments is in deficit.

Including: foreign currency, foreign currency deposits, foreign currency securities (government bonds, treasury bills, corporate bonds, stocks, etc.), foreign currency payment certificates (bills, bank deposit certificates, postal savings certificates, etc.).

Let’s look at the definition of savings: a deposit activity in which urban and rural residents deposit temporarily unused or surplus monetary income in banks or other financial institutions.

Also called savings deposit.

As can be seen from the above, foreign exchange includes foreign currency deposits and others (foreign currency, foreign currency securities, foreign currency payment certificates).

Savings are not only a kind of deposit, but also a deposit of urban and rural residents (individuals), excluding deposits of units and enterprises.

Then non-savings foreign exchange should refer to foreign exchange deposits with the public (enterprises, groups, institutions).

The reason for the decrease in non-saving foreign exchange is that companies use foreign exchange for imports (or other external payments), indicating that companies need raw materials (or other production factors), which means that domestic demand increases.