Foreign exchange is a foreign currency asset held by a country and can be used for international settlement of creditor's rights and debts. Compared with a country, foreign exchange reserve refers to the foreign exchange part of the international reserve assets held by a government, that is, the creditor's rights held by a government in foreign currency can be converted into foreign currency at any time. You said that you bought a lot of foreign currencies directly with your own currency, which is not a simple currency exchange. RMB can't circulate abroad, leaving China is like waste paper.
1. What you said about constantly buying foreign currency with domestic RMB will not increase your foreign exchange abroad, but will lead to RMB depreciation.
When there is domestic inflation, the exchange rate of RMB against foreign currency will fall. That is, the same foreign exchange needs more RMB to buy. It is also impossible to increase the country's foreign exchange reserves.
Please note that foreign exchange is an asset that can be converted into foreign currency at any time, not a simple currency.
I. International reserve assets include:
1. gold reserve, that is, the gold reserve held by a country's monetary authorities;
2. Foreign exchange reserves, that is, foreign convertible currency deposits and other short-term financial assets under the control of a country's monetary authorities;
3. The reserve position of a country's monetary authorities in the International Monetary Fund;
4. Unused special drawing rights allocated by the International Monetary Fund to member countries.
Second, when a country's currency is exchanged with another country's currency, it involves many factors such as the gold content of the currency and the actual purchasing power. When inflation occurs in a country, the gold content and actual purchasing power of money will decrease. The scale to measure the value of a currency must be combined with the country's economic strength, inflation, interest rate, political outlook and the relationship between supply and demand of the currency in the market. Inflation means that a country's money supply is far higher than the demand, and when the supply exceeds the demand, it will depreciate. In a world with highly developed information, it is impossible for other countries not to know that a great event has happened in one country. A currency leaving the issuing country is equivalent to waste paper. No one will accept something worthless. On the surface, the exchange between currencies seems to be only the exchange between two kinds of paper money, but there are very complicated factors behind this exchange.
Third, please note that foreign exchange is an asset that can be converted into foreign currency at any time, not a simple currency. China is restricted by these "assets" factors when using RMB to exchange foreign currency. With our foreign assets unchanged, issuing more RMB to exchange for other countries' currencies can only lead to the need for more RMB for equivalent foreign assets, which is RMB depreciation.
4. As the main currency of international payment and foreign exchange transactions, the US dollar is an important means of payment in international settlement. Why only China buys US Treasury bonds is determined by the current international status of the United States. The United States buys things from China, which is a matter of international trade. I can find some information about how international trade happens and international settlement, but I can't say it at once.