First, make clear the foreign exchange account: after foreign currency comes in, it needs to be converted into RMB before it can be used. For example, if 1 USD is converted into RMB 7, it is a foreign exchange account.

Regardless of the exchange rate changes, when the foreign exchange holdings decline, it means that there is less money in the market, which will lead to tight monetary policy-in layman's terms, there is not enough money.