a) The foreign exchange reserves chart shows the amount of foreign currency and other assets held by the government to support its currency and maintain stability in the foreign exchange market. If the chart shows a decline in reserves, it may indicate that the government is using up its resources to stabilize its currency, potentially causing concerns about the country's economic stability.
b) In advising the government, it is important to address the reasons for the decline in reserves. If the decline is due to excessive spending or a lack of export earnings, the government may need to implement measures to reduce spending, increase exports, or attract foreign investment. It may also be necessary to consider implementing policies to improve the efficiency of the economy and attract foreign investment to boost reserves. Additionally, the government may need to consider borrowing or seeking assistance from international organizations to bolster its reserves in the short term. It is also important to communicate with the public and financial markets to ensure confidence in the government's ability to manage the situation effectively.
Imagine your called by minister of finance and governor of BOT and they showed you below charts
- Foreign exchange reserves
a) Do the interpretation of above
b) Advise the government on what should be done
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