Foreign Exchange Reserves | YOU MUST KNOW


In this article we will talk about the role of the US Federal Reserve in Forex. In fact, the Fed’s decisions have a significant impact on the movement of pairs in the dollar-linked currencies, especially in the long term. Its is also known as the Federal Reserve is the banking system central of the United States, was created in September 23, 1913 in conjunction with the development of the Federal Reserve Act, in response to a series of economic repercussions in that period, and with the passage of time has expanded the roles and responsibilities of the system the Federal Reserve and evolved structure.

The structure of the F R System

Federal Reserve System consists of a structure (Board of Governors or the FR) and (Federal Open Market Committee FOMC) and (twelve regional federal reserve banks distributed to major cities) throughout the United States.

In fact, Foreign Exchange Reserves – the Open Market Committee is responsible for setting monetary policy, consisting of all members of the Federal Reserve and the seven heads of the twelve regional banks. The five of the twelve presidents of regional banks allowed to vote at any time and they head the Reserve Bank in New York and four others Atjaddedon every year.

It should be noted that it is the most important things responsible by the Fed is the monetary policy situation as a selection rate of interest and determine the asset purchase, that these examples are considered the most important reserve means federal control monetary policy, that the most important goals for the purchase of assets is to increase the currency is displayed in the financial market and thus increase economic growth.

As for the interest rate, the aim of which is the same asset purchase target Both tools affect the economic growth and also affect inflation, Vtkulail interest rate, for example, increases economic growth, but at the same time, the increase in reducing interest rates increase the volume of inflation clearly resulting in twice the value of the currency against other currencies, as well as in the case of the purchase of assets, but it should be noted that the control in the interest rate and asset purchases have a clear impact in the forex market over the long term.

By this way Federal Reserve fix up the Foreign Exchange Reserves.

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