a rise in domestic stocks. A third and critical function is to maintain liquidity in case of an economic crisis. AUD.0005 audcad Information.00001.00021.84 -4. Retrieved "International Reserves and Foreign Currency Liquidity - belarus". They also include financing of imports and the ability to absorb any unexpected capital movements. "International Reserves and Foreign Currency Liquidity - tunisia". NZD.0008 sgdjpy Information.001.033.2 5 -1.62 -10.
Reserves of foreign currency provide a small return in interest. So a central banks can transfer its reserves around different foreign assets (euro, gold, treasuries, wheat, etc) without impacting exchange rates with its local currency. According to the latest data, fall in foreign reserves is primarily due to decline in foreign currency assets. Foreign exchange operations that are unsterilized will cause an expansion or contraction in the amount of domestic currency in circulation, and hence directly affect monetary policy and inflation: An exchange rate target cannot be independent of an inflation target. Information.0001.28.5 USD 5 -260.42.