The adequacy of foreign exchange reserves
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melvyn
Apprentice
Joined: 17 Nov 2005
Posts: 3
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 Posted: 05/14/08 - 09:15 Post subject: |
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| I have recently heard that foreign exchange reserves are very important for government. I have recently been looking to find out as much as I can about Forex reserves, but I would still like to know more about the adequacy of foreign exchange reserves. If anyone could help me with some information, that would be great. Thanks in advance. |
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lennie
Apprentice
Joined: 28 Dec 2004
Posts: 2
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| Posted: 06/13/08 - 00:59 Post subject: |
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The answer to your question will be relatively obvious when you understand what actually something like that means. Foreign exchange reserves actually represent a total amount of money a central bank of a country owns. Now, it is held in different currencies, and it is crucial for balance in domestic economy. Now, the adequacy means that a central bank holds enough funds to control the economy of its state. Mostly, adequacy is described in terms of a debt that is short-term, or in terms of the relative import on a monthly level. For more info, go to http://www.treasury.gov/offices/international-affairs/
economic-exchange-rates/pdf/2006_Appendix-3.pdf. |
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