Briefly explain the reasons, why write off foreign exchange reserves and how to operate.
60% of China's foreign exchange reserves are US dollars, but the depreciation of the US dollar causes exchange rate risks. The growth of foreign exchange reserves leads to a large increase in foreign exchange holdings, which has a great negative impact on China's economy.
Policies to offset foreign exchange reserves:
1 Open market operation
The so-called open market operation refers to the central bank buying and selling securities in the open market to recover the increase in money supply caused by the increase in foreign exchange holdings.
2 control the money supply
3 Adjust government deposits
4 foreign exchange swap transactions
5. Relax the fluctuation range of exchange rate.
6 Intervention in the forward foreign exchange market
7 relax the control of capital outflow
8. Levy interest balance tax