A large amount of dollars exchanged for Thai baht will lead to an increase in the price of Thai baht. For example, the original price of US dollar against Thai baht was 1: 100, but it became 1:60 or even 1:50 after buying in large quantities. In this process, Solo invested 3 billion dollars, and his 1 billion dollars may be exchanged for 85. But also led to the depreciation of the dollar and the appreciation of the Thai baht. This will cause everyone to buy Thai baht, which will lead to the continuous appreciation of Thai baht, and some people will sell dollars. At this time, Solo will buy dollars again, and he may use the changed Thai baht to buy dollars at a ratio of 55: 1. In this way, 1 100 million dollars for 8.5 billion baht can buy nearly 654.38+0.5 billion dollars. And $3 billion may become $4.5 billion in exchange! He has huge assets. If he invests 300 billion dollars, he will immediately cash out 450 billion dollars from Thailand! Moreover, it may hit the exchange rate to 1: 200, which can be said to be a serious blow to Thailand's economy, thus causing the Asian financial turmoil. The so-called devaluation of local currency means that local currency is relative to foreign currency. Once the foreign exchange reserves are insufficient, the ability to intervene in the foreign exchange market will decline, thus reducing the stability of the local currency and increasing risks! However, when the currency risk increases, in the foreign exchange market, the local currency risk suddenly appears, its attractiveness drops sharply, and it will be sold to a certain extent, thus forming depreciation pressure on the local currency. 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. A certain foreign exchange reserve is an important means for a country to adjust its economy and achieve internal and external balance. When the balance of payments is in deficit, the use of foreign exchange reserves can promote the balance of payments; When the domestic macro-economy is unbalanced and the total demand exceeds the total supply, foreign exchange can be used to organize imports, thus adjusting the relationship between total supply and total demand and promoting macroeconomic balance. At the same time, when the exchange rate fluctuates, foreign exchange reserves can be used to intervene in the exchange rate to stabilize the exchange rate. Therefore, foreign exchange reserves are an indispensable means to achieve economic balance and stability, especially when economic globalization is developing and one country's economy is more susceptible to the influence of other countries' economies.