AP ImagesForex reserves can help a country buoy local currency or even provide insurance in the case of a national economic emergency. China tops other countries in foreign reserves with $3.2 trillion held. The dollar and the euro are the most common reserve currencies used in international transactions, so the US and EU don't need to hold a lot of reserves.
In the high stakes game of international trade, holding onto a stockpile of foreign cash gives you options.
Forex reserves can help buoy the local currency or even provide much-needed insurance in the case of a national economic emergency. And when reserves are plentiful, a country can even use them to wield influence on international affairs – after all, most financial assets are simultaneously someone else’s liability.See the rest of the story at Business Insider
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