What are reserves?

Reserves are like stashed coins that a country keeps hidden to help its money stay strong.

Imagine you have a piggy bank full of coins. Every time you get extra allowance, you put some coins into the piggy bank so it doesn’t get too empty. That way, when you need more coins for candy or toys later, you know you’ve got something saved up.

A country’s reserves work like that piggy bank. They keep extra money, usually from other countries, to help their own money stay valuable and steady.

Sometimes, a country might use its reserves to buy more of another country’s money if it gets too expensive. This helps keep things fair for people who trade or travel between countries.

Think of it like trading toys with your friend. If your friend has too many toys and not enough coins, you might give them some of your coins so the game stays fun for both of you.