Foreign exchange reserves are stocks of foreign currencies that a government maintains to buy its currency in foreign exchange markets.

Question

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Foreign exchange reserves refer to the stocks of foreign currencies that a government holds in order to manage its exchange rate and ensure liquidity in the event of an economic crisis. These reserves can be used to support the value of the domestic currency in foreign exchange markets by buying up its currency when its value is low.

Foreign Exchange Reserves Are Stocks of Foreign Currencies That a Government