Foreign exchange reserve, also known as 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. It is an asset held by the national monetary authority and can be converted into foreign currency at any time. In a narrow sense, foreign exchange reserve is an important part of a country's economic strength, and it is a foreign exchange accumulation used by a country to balance international payments, stabilize exchange rates and repay foreign debts. Broadly speaking, foreign exchange reserves refer to assets denominated in foreign exchange, including cash, foreign bank deposits and foreign securities. Foreign exchange reserve is an important part of a country's international liquidity, which has an important influence on balancing international payments and stabilizing exchange rate.

Exchange rate appreciation

Advantages: it is helpful to import, reduce the price of imported goods and curb inflation. At the same time, for ordinary people, the cost of studying abroad, traveling and shopping is greatly reduced. At the same time, the rise of exchange rate is helpful for enterprises to invest abroad.

Disadvantages: affecting exports, leading to difficulties in the survival of export enterprises and the closure of some enterprises, thus affecting employment. If the appreciation is too fast, the central bank needs to regulate the exchange rate, which will increase foreign exchange reserves and money supply, which may lead to domestic inflation.