The foreign exchange deposit reserve ratio refers to the ratio between the foreign exchange deposit reserve of financial institutions in the People's Bank of China and the foreign exchange deposits received. Foreign exchange deposit reserve refers to a certain proportion of foreign exchange deposits deposited by financial institutions in the People's Bank of China according to regulations. For example, when a bank receives a deposit of 1 1,000 yuan, it needs to pay 200 yuan to the central bank, and the deposit reserve ratio is 20%. If a deposit of 1 1,000 yuan is paid to the central bank, the deposit reserve ratio is 10%.

Why should we raise the foreign exchange reserve ratio?

Because the appreciation of RMB will reduce the competitiveness of exporters, the same goods will become more expensive abroad, which will naturally affect sales, and the increase of deposit reserve ratio means that commercial banks need to pay more foreign exchange. If banks don't have that much money, they can only use RMB to buy foreign exchange from the market. In this way, there will be less foreign exchange in the market and more RMB, which will naturally depreciate.