1, a large number of international hot money (international speculators) fled, which reduced the country's foreign exchange reserves.
The increase of export has increased the country's foreign exchange reserves.
The accumulation of foreign exchange reserves will make the cost of export enterprises irreparable and bankrupt. At the same time, holding a large amount of foreign exchange reserves in the form of paper money opens the door for foreign exchange issuing countries to escape debts through inflation, which will lead to huge exchange losses of foreign exchange holding countries and bank bankruptcy.
Extended data
When managing and operating foreign exchange reserves, governments in various countries generally follow three principles: safety, liquidity and profitability.
Security means that foreign exchange reserves should be deposited in countries with political stability and strong economic strength and banks with high reputation, and always pay attention to the political and business trends of these countries and banks; We should choose currencies with low risk and relatively stable currency value, pay close attention to the balance of payments and economic situation of these currency issuing countries, predict the exchange rate trend, adjust the currency structure in time, and reduce the exchange rate and interest rate risks; We should also invest in safer credit instruments, such as national bonds with high reputation or institutional bonds guaranteed by the state.
Liquidity refers to ensuring that foreign exchange reserves can be cashed at any time and used for payment, and redemption can be realized at the lowest cost. When arranging foreign exchange assets, countries should make reasonable arrangements for the investment term combination according to their own forecasts of foreign exchange receipts and payments in a certain period, and consider dealing with emergencies. Cash and treasury bonds are more liquid, followed by medium-term treasury bonds and long-term treasury bonds.
Profitability means that under the premise of ensuring safety and liquidity, through the analysis and prediction of market trends, we can determine a scientific investment portfolio, seize market opportunities, invest and trade assets, and realize the preservation and appreciation of reserve assets.
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