Analytical Study on Factors Influencing the International Reserves of Selected Countries

An Analysis of Macroeconomic Variables Affecting International Reserves

Abstract

Studies of foreign reserves have increased in popularity among academics during the lastdecade. A lot of people are thinking about looking at the motivations behind countries' decisions tohoard foreign exchange reserves again after the current financial crisis in Asia. The accumulation offoreign reserves around the globe has increased dramatically in recent years. Large amounts of foreigncurrency reserves have been amassed in recent decades, particularly by rising countries. Countriesneed foreign reserves for a variety of reasons, including protecting themselves against a suddenshortage of foreign currency and facilitating exports by means of managing exchange rates. In thisresearch, we looked at how a few of macroeconomic variables affected these buffers. The stationarity ofthe variables in the yearly frequency time series data was examined using the Augmented Dickey Fuller(ADF) and Phillips-Perron (PP) tests. All variables were found to be co-integrated, indicating a long-termlink. Various parameters have been explored in recent research on the effects of having foreign reserves.