Study On The Factors Affecting Foreign Exchange Reserves Of Emerging Large Countries Based On Factor Analysis

The rapid growth of foreign exchange reserves in emerging market countries, has farexceeded the normal requirements, Brazil, China, India and Russia four large emergingcountry is particularly prominent Since2000.As of December2011, the world’s total foreignexchange reserves have reached$10.2trillion, while China, Brazil, Russia, India’s foreignexchange reserves held accounted for41%of which.But it`s not the better, foreign exchangereserves is the more. foreign exchange reserves is a "double-edged sword".With themaintenance of the country’s financial stability, improve investor confidence and promoteeconomic development, rapid growth of foreign exchange reserves has also brought thenegative effects to the development of national economy such as weaking the effects ofmonetary policy, inflation, increasing trade friction, currency appreciation.Therefore,studyting the reasons to The rapid growth of excessive foreign exchange reserves of emergingpowers, controlling the growth rate and size of foreign exchange reserves, improve themanagement level of foreign exchange reserves, has important theoretical and practicalsignificance.In this paper, drawing on previous research results, firstly,we try to analyzing currentsituation of the foreign exchange reserves of emerging powers such as the size,growth rateand problem of management, while baseing on the theory of origin foreign exchange reserves,contacting the actual situation to emerging powers,in-depth analysis of factors affectingforeign exchange reserves of emerging powers to construct the dual structure theoreticalmodel of foreign exchange reserves factors; secondly, using SPSS factor analysis and clusteranalysis of empirical testing, empirical results show that China’s foreign exchange reservesmore volatile by the internal factors,external factors on Russia have more significantinfluence in foreign exchange reserves, Brazil and Russia affected by internal factors andexternal factors, but more inclined to external factors; Finally, Finally, we propose a relevantpolicy recommendations, based on the specific circumstances of each country.There are someinward policy recommendations such as adjusting economic structure, Optimizing thestructure of reserves,some outward policy recommendations,such as changing foreign capitalutilization strategy,increasing foreign investment and strengthening the international monetarycooperation.