The Current Status and Management of China’s Foreign Exchange Reserves.docVIP

The Current Status and Management of China’s Foreign Exchange Reserves Abstract Foreign exchange reserves were formed in foreign economic activities of a country, and it will have on a countrys foreign economic relations and domestic macro-economy have important effects. China has huge foreign exchange reserves, can improve our external payments, international payments, and the ability to intervene in foreign exchange markets, maintained the good international reputation on the other, in the form of money or other financial assets in China holds huge foreign currency reserves, giving up huge foreign exchange reserves equivalent to economic resources into production, is not conducive to Chinas economic growth and increased national benefits. In Chinas current foreign exchange reserve management system, in order to stabilize the exchange rate of the Central Bank, constantly reactive to the base currency to buy foreign currency, and by regulating the deposit reserve requirement ratio, discounting and open market operation and other monetary policy tools to offset by foreign exchange amount of base currency, weaken the independence of the Central Banks monetary policy. Ever-increasing foreign exchange, will become an impact on prices, the economy faces internal and external shocks, our economy faces internal and external pressures. And in some ways, Chinas massive foreign exchange reserves reflect Chinas economic weaknesses, in addition to foreign exchange assets and liabilities structure defect, foreign investment is low and face a bigger risk of return. Key words: foreign exchange reserves and risk management Catalogue Introduction 4 I. Current situation of Chinas foreign exchange reserves 5 1. The exchange reserves are generally on the rise 5 2. Chinas foreign exchange reserves were currently fluctuating situation 5 II. Two causes of the huge foreign exchange reserves 6 1. The trade surplus continued 6 2. Attracting foreign direct investment in the new contribution