Foreign exchange reserves are the foreign assets which are controlled or held by the country’s central bank. By forex exchange reserves of a country, we mean the total amount of foreign assets that are owned or controlled by the Central Bank of that Country. These reserves are usually made of gold or a specific currency. Apart from this, they can also mean special drawing rights and marketable securities which are dominated in foreign currencies such as government bonds corporate bonds and equities, treasury bills and foreign currency loans.
The forex reserves of a country are usually displayed as historical data, historical charts, economic calendar news, forecast, charts and actual values. These are accumulated and assessed for a proper market analysis at the time of need. The China forex reserves gives us at a glance, the nature of the affluence of China at the time of study.
A careful look at China’s forex reserves for example, shows that it rose to USD 3140 billion in December, 2017 from a value of 3119 billion at the end of November, 2017. This value was above the market expectation of USD 3130 billion. So far, this was the highest ever recorded value since September, 2016. The value of its gold reserves also increased to USD 76.47 billion at the end of December from USD 75.83 billion at the end of November. At the moment, China forex reserves are averaged at 948775.16 USD Million from 1980 until 2017, thus, reaching an all time high value of 3993212.72 USD Million in June of 2014 and a record low of 2262 USD Million in December of 1980.
USES OF FOREX EXCHANGE RESERVE DATA
The forex exchange reserve data can be useful in the following aspect
- IT SERVES AS A SOURCE OF INFORMATION
The forex exchange reserve data are gathered over time and displayed in the form of charts. These charts are usually sorted into historical data which can be used by the trader as a source of information when needed for market analysis. The China forex reserves gives the trader a general information on the standings of the economy of China in the market.
- IT AFFECTS THE EXCHANGE RATE
The foreign reserve of a country usually controls the economy which in turn affects the exchange rates of the currencies. The higher the forex reserves, the higher the value of the currency.
- IT CAN BE USED FOR PLANNING AND MARKET PREDICTION
The historical data can be used for market forecast and prediction. The trader can be able to use the data available to do a market forecast before investing in the foreign exchange market to avoid losing huge amount of money to a failed system.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.