Top 15 Countries in Foreign Exchange & Gold Reserves

The economy of any country runs on the fact that how successfully one manages the balance between the growth rate of country and foreign exchange & gold reserves. Foreign exchange has been and always will be the most vital factor in attributing the inflation rates of any country.

To maintain the equilibrium in foreign exchange, every country needs to balance their give and take of foreign exchange. In order to understand the calculations and depth of foreign exchange, one need to understand what exactly foreign exchange is.

Foreign exchange is the exchange rate decided by every major monetary organization and central bank of countries. It’s the rate between two countries while dealing for the foreign currency and gold. Every country deals and buys foreign currency. It is also known as foreign reserves or FX reserve. Foreign exchange commonly includes monetary funds and gold and is broadly termed as Official International Reserves or International Reserves. These are actually the assets of central bank which are kept in different reserve currencies. Currencies in which these reserves are held majorly cater from Dollar, Euro, Pound and Japanese Yen. The major reason why dollar is dominating in these foreign exchange currency reserves is the lack of coordination and cooperation in different countries and their monetary policies.

What does foreign exchange rate do?

Foreign exchange rate can be taken as a token to buy the domestic currency of any country through central banks. Domestic currency is the liability of central bank as it is printed for FIAT currency.

Why foreign exchange rate is flexible?

One might have heard that foreign exchanges rates are fluctuating. The major reason behind this fluctuation is due to supply and demand rate and also on the value of domestic and foreign currency. Supply and demand tends to push or pull the value of currency and thus eventually affecting foreign exchange rate. Inflation & exchange rates are proportionate to each other and thus somewhere they both affect each other. Inflation is an economic condition where the value of domestic currency falls in ratio of the value of goods and services.

When a country buys or invest in foreign currency and if the targeted currency rate is higher than the domestic one then it is made to invite inflation as in need to fulfill the gap between both currencies, more currency would be printed thus costing more scarcity in country.

Countries that top in exchange reserves: Here are the names of those countries that top in foreign exchange reserves in values of dollar. These countries have not only foreign currency and gold but also the special drawing rights in International Monetary fund. This list is the extract of CIA World Fact Book:

1. China

Reserves of foreign exchange and gold: $3,236,000,000,000

2. Japan

Reserves of foreign exchange and gold: $1,259,000,000,000

3. European Union

Reserves of foreign exchange and gold: $812,800,000,000

4. Saudi Arabia

Reserves of foreign exchange and gold: $541,100,000,000

5. Russia

Reserves of foreign exchange and gold: $498,600,000,000

6. Taiwan

Reserves of foreign exchange and gold: $390,600,000,000

7. Brazil

Reserves of foreign exchange and gold: $352,000,000,000

8. Switzerland

Reserves of foreign exchange and gold: $331,900,000,000

9. Korea, South

Reserves of foreign exchange and gold: $306,400,000,000

10. India

Reserves of foreign exchange and gold: $297,900,000,000

11. Hong Kong

Reserves of foreign exchange and gold: $285,400,000,000

12. Germany

Reserves of foreign exchange and gold: $238,900,000,000

13. Singapore

Reserves of foreign exchange and gold: $237,900,000,000

14. Algeria

Reserves of foreign exchange and gold: $183,100,000,000

15. Thailand

Reserves of foreign exchange and gold: $175,100,000,000

 

 

 

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