Foreign exchange reserve: the foreign exchange part of the international reserve assets held by a government, that is, the creditor's rights held by a government in foreign currency.
In order to meet the needs of international payment, foreign exchange held by central banks and other government agencies is foreign exchange reserves.
Together with gold reserves, special drawing rights and readily available funds in the International Monetary Fund, it constitutes the sum of a country's official reserves (reserve assets).
The main purpose of foreign exchange reserves is to pay off the balance of payments deficit, which is often used to intervene in the foreign exchange market to maintain the exchange rate of the national currency.
The main forms of foreign exchange reserves are short-term government deposits abroad and other means of payment that can be cashed abroad, such as foreign securities, checks, promissory notes and foreign currency drafts of foreign banks.