Generally speaking, China will gain a higher voice in the international arena with the increase of foreign exchange reserves, because the increase of foreign exchange reserves will accelerate the internationalization of RMB, and make China gain a greater voice in political and economic affairs and improve its international status. In this case, many countries in the world will buy a lot of RMB as foreign exchange reserves. According to the relationship between supply and demand, the amount of RMB circulating in the world will decrease, and then the domestic RMB price will increase and the RMB will appreciate.
From the side, the long-term increase of foreign exchange reserves means the long-term increase of domestic economy. Driven by China's economic growth, strong personal consumption, high export and loose macroeconomic policies, the stability of regional economy will make it a safe haven currency, thus driving the appreciation of RMB.
In a word, the increase of foreign exchange reserves can improve the intrinsic value of RMB, so its increase can lead to the appreciation of RMB.
Foreign exchange reserves, also known as foreign exchange reserves, refer to foreign exchange assets held by central banks and other government agencies in various countries and can be converted into foreign currency at any time to meet the needs of international payment. Under normal circumstances, the sources of foreign exchange reserves are trade surplus and capital inflow, which are concentrated in domestic central banks to form foreign exchange reserves. The specific forms are: short-term government deposits abroad or other means of payment that can be cashed abroad, such as foreign securities, checks, promissory notes, foreign currency drafts of foreign banks, etc. It is mainly used to pay off the balance of payments deficit. When a large number of domestic currencies are sold, foreign exchange reserves are used to buy domestic currencies to intervene in the foreign exchange market and maintain the exchange rate of domestic currencies.
By the end of July 2020, China's foreign exchange reserves stood at $3154.4 billion, an increase of $4.210.40 billion or10.4% over the end of June. By the end of May, China's foreign exchange reserves stood at $322,654,380.8 billion, an increase of $23.6 billion or 0.74% over the end of April. By the end of 20021,12, China's foreign exchange reserves were US$ 3,250.2 billion, an increase of US$ 27.8 billion or 0.86% compared with the end of1,and an increase of about US$ 33.6 billion in 20021.
According to the latest data from the State Administration of Foreign Exchange, by the end of February 2022, China's foreign exchange reserves stood at $3.213.8 billion, a decrease of $7.8 billion or 0.24% compared with the end of June.
Foreign exchange reserve is an internationally accepted foreign currency held by a country's monetary authorities to make up for the balance of payments deficit and maintain the stability of its currency exchange rate, and it is a part of international reserves. International reserves include foreign exchange reserves, gold reserves, ordinary drawing rights and special drawing rights of the International Monetary Fund (IMF). Foreign exchange reserves are the most important reserve assets.
Looking back on the development and changes of China's foreign exchange reserves: 1000 billion US dollars was exceeded for the first time at the end of 1996, and the reserves rose relatively steadily in the following four years. Since 2000, China's foreign exchange reserves have shown a rapid growth trend. By the end of 2005, it had increased to 81887.2 billion USD, ranking second in the world.
In February 2006, China's foreign exchange reserves reached US$ 853.7 billion, surpassing Japan and becoming the largest holder of foreign exchange reserves in the world. According to the data at the end of April 2009, Chinese mainland's foreign exchange reserves ranked first in the world economy, second in Japan and third in Russia. By March of 20 10, China's foreign exchange reserves had reached 2,447.084 billion US dollars, ranking first in the world. By the end of February, Hong Kong's foreign exchange reserves stood at US$ 92.8 billion, ranking third in the world, next only to Japan and the mainland of China. Since the reunification, Hong Kong's foreign exchange reserves have increased from/kloc-0 to $92.8 billion at the end of 1997 to $311200 million at the end of 20/kloc-0, an increase of 2.35 times.