Foreign Exchange Reserves

Foreign exchange reserves (also called Forex reserves) in a strict sense are only the foreigncurrency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, SDRs and IMF reserve positions. This broader figure is more readily available, but it is more accurately termedofficial international reservesor international reserves. These are assets of the central bank held in different reserve currencies, mostly the US dollar, and to a lesser extent theeuro, theUK pound, and the Japanese yen, and used to back its liabilities, e.g. the local currency issued, and the variousbank reserves deposited with the central bank, by thegovernment or financial institutions.