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. Function of foreign exchange reserve: 1: You can buy or sell foreign currency to adjust the exchange rate and make it balanced. When a country's local currency is facing appreciation, it shows that foreign markets have increased the demand for local currency. If we don't invest more local currency in foreign markets at this time, the appreciation of the currency will be unfavorable to our export trade. On the other hand, if the local currency depreciates, then we need to reduce foreign exchange reserves and buy foreign currencies to achieve exchange rate balance. Therefore, we can see that the more foreign exchange reserves a country has, the stronger its ability to adjust its local currency exchange rate. We all know that imported goods are traded in foreign currency. If a country's foreign exchange reserves are insufficient, it will be embarrassing for the import transaction volume to exceed the foreign exchange reserves. Rob terry Fen, a famous professor of economics at Yale University, once said that in order to ensure the foreign exchange demand in import and export, a country should maintain a foreign exchange reserve of 3-4 months' total import, so as not to have a big foreign exchange shortage in import and export. 3. The wealth foreign exchange reserves representing the country are also assets belonging to the central bank. The more foreign exchange, the stronger the solvency of international affairs.