What is Foreign Reserves?
Foreign exchange reserves1 are pools of foreign currencies held by central banks to assist the international trade of goods and services. For instance, the Reserve Bank of Fiji (RBF) currently holds on average the equivalent of around F$2.1 billion in the currencies of our major trading partners, which are the United States, Australia, Euro zone, UK, Japan and New Zealand. These currencies represent the balance of money received from all our exports; tourists who visit our shores, relatives and workers that live abroad (remittances), investments in Fiji made by foreign companies and countries and organisations that lend to Fiji, after subtracting our payments for imports, debts and other external obligations.
Why do we need Foreign Reserves?
Foreign reserves help pay for Fiji’s imports since we do not produce all the goods we need. They also assist us in meeting our external debt commitments and, facilitate transactions by our people who travel abroad and need foreign currencies.