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But countries don't pay for imports with the currency of the producing nation and get their own currency for their exports. They use the USD for that. Econ 101
by Eisenstein 1y ago
But countries don't pay for imports with the currency of the producing nation and get their own currency for their exports. They use the USD for that. Econ 101 doesn't apply when you are an international reserve currency because demand is not exclusively tied to exports.
- corimaith 1y agoIncreasing FX reserves also increases the national currency's strength because the Central Banks has more reserves to prop up it's value. The opposite is what we call a currency crisis when you run out such reserves and the value of your currency falls.