Foreign reserves are the foreign currencies reserved by the government of a nation. If the reserve is decreasing, the central bank increase the price of their local currency leading to inflation. A positivity in the value of the foreign reserves indicates good economy.
I just want to ask a question. Assuming people are buying the foreign currencies and hold it in their domiciliary account and not used in another country for buying of goods to be imported, is the foreign reserves decreasing like that? I mean if the foreign currencies is bought by the citizens of a country and hold in their bank account, and not used to buy from another country.
