Foreign exchange reserves are asset held by the central bank of a country in various foreign currencies(To a larger extent,US dollar form part of the currency in the reserve,also currencies like but not limited to Pound sterling,Euro and Japenese also are part of the reserve).
A currency reserve is a currency that is held in large amounts by governments and other institutions as part of their foreign exchange reserves. Reserve currencies usually also become the international pricing currencies for products traded on the global market such as oil, gold and silver.
Foreign-exchange reserves should only include foreign banknotes, foreign bank deposits, foreign treasury bills, and short and long-term foreign government securities.
Foreign-exchange reserves are stated as reserve assets in the balance of payments and are located in the capital account. FX reserves serves as a means to pay-off international debt obligations, or to influence their domestic exchange rate.
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