Reasons for shrinking foreign exchange reserves:
First, because the exchange rate of the US dollar in the international market has strengthened, the non-US dollar assets in foreign exchange reserves have shrunk, resulting in a decline in the book value of foreign exchange reserves, but this is not a real loss;
Second, because of the capital outflow during the period, the principal of foreign exchange reserves actually decreased.
Foreign exchange reserves, also known as foreign exchange reserves, refer to foreign exchange assets held by central banks and other government agencies to meet the needs of international payment.
The specific forms of foreign exchange reserves include: 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, intervene in the foreign exchange market and maintain the exchange rate of the domestic currency.