In fact, the essence of foreign exchange is the protection of local currency. A lot of foreign exchange means that you have the corresponding economic strength to ensure the stability of your local currency (such as loans, income certificates and fixed assets). Take China as an example. We have a large amount of foreign currency and gold reserves, and others can trust RMB in trade.

The large loss of foreign exchange directly shows that the national economic competitiveness is at a disadvantage; Due to the decrease of foreign exchange, the trust of local currency is reduced, and the economic environment is further deteriorated, forming a vicious circle.

It is worth noting that the more foreign exchange, the better. After all, foreign exchange occupies a part of social wealth, and excessive foreign exchange reserves will affect the wealth distribution of a country, which is a problem facing our country at present.