The Mathematical Quantification Analyzes On The Foreign Exchange Reserves For China

Foreign exchange reserve is a comprehensive variable. The scale of foreign exchangereserve is verb important to a country's economY. It often keeps closerelationship with thebalance of payments, exchange rate regimes, international trade, international status and economicpower of a country. Since the system reform of the foreign currency has begun in1994, foreignexchange reserve of our country increases rapidly, has increased to 85,370 million dollars as ofFebruary, 2006. China has exceeded Japan as the first country of the largest amount of foreignexchange reserve all around the world. So it's of great practical significance for us to foreignexchange reserves.I read of many relevant documents, such as articles on the academic perspective, and thispaper consists of three sections:1. Review of our country situation of foreign exchange reserve, analyse the increment andacceleration rate on international balance of payments in 1994-2005, find out the main reasonwhy the foreign exchange reserve increases in recent years.2. The co-integration analysis overcomes the traditional econometric problem when thevariables become non-smooth. Most of the variables usually did not fit for stable-financial-time-series, and is just a tool to overcome the shortcoming. Through using the modern quantitativeanalysis tools-"co-integration analysis", this paper establishes short-term and long-term foreignexchange reserves balance models.3. On basis of unbalance economic system, abandoning the premise Assumption: "actualhold reserves is the desired reserves"which is often introduced in domestic. Established thedynamic adjustment model for the foreign exchange reserves.