What is forex reserve investopedia

International Reserves Definition Investopedia

Holding the currencies of other countries as assets allow governments to keep their currencies stable and reduce the effect of economic shocks.

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In this case, the currency's value is being held down; since (if there is no sterilization) the domestic money supply is increasing (money is being 'printed'), this may provoke domestic inflation (the value of the domestic currency falls relative to the value of goods and services).

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