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foreign exchange reserve

Many countries maintain savings accounts of currencies other than their own (usually it’s the US dollar they are saving). This is typically so that the country can more easily guarantee that it will pay back any debt that is denominated in a foreign currency (again, usually that’s in dollars). Also, it can use its savings of foreign currencies to influence the value of its own currency, e.g. by selling dollars to buy its own currency and thus prop up its value.

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