China stockpiles dollars, it raises the dollar value compared to that of the yuan. The reserves are made of gold or a specific currency. They do this for the same reasons as those with fixed rate systems. Saudi Arabia 509.0 Oil.
This pushes down the value of the local currency since fewer people want. What is foreign, exchange, reserves foreign exchange reserves are assets held on reserve by a central bank in foreign currencies.
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Dollar, since it is the most traded currency in the world. Similarly, foreign investors will get spooked if a country has a war, military coup, or other blow to confidence. Dollar Euro to Dollar Conversion How the Government Regulates Exchange Rates. Treasuries to keep its value lower than the dollar. First, countries use their foreign exchange reserves to keep the value of their currencies at a fixed rate. They use it to pay their workers and local suppliers.