Glossary
What is the Foreign Exchange Reserves?
Reserves in months of imports
Definition
Foreign exchange reserves are the foreign-currency assets held by a central bank. They are often expressed as "months of import cover" — how many months of imports the reserves could pay for.
Why it matters
Reserves are a buffer against external shocks and currency crises. More months of import cover means a country is better able to defend its currency and meet foreign obligations.