A large outflow of domestic assets will lead to a decline in domestic foreign exchange reserves, and insufficient foreign exchange reserve capacity will inevitably lead to the depreciation of the domestic currency! Please understand that the so-called devaluation of local currency refers to the local currency 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.

From the above, I can answer your question!