Would need one pound sterling to buy one and a half dollar. (Of course, our numbers are hypothetical.)

7.7.1.4. Read and translate the text “The Use of Gold and Foreign Exchange Reserves” and give

A synopsis of it in Russian.

The Use o f Gold and Foreign Exchange Reserves

In the functioning of the world exchange system great importance is attached to gold and foreign

exchange reserves. What are these reserves?

This is the stock of gold and foreign currencies held by a country to finance any calls that may be

Made from its creditors for the settlement of debt. Reserves used to be held primarily to finance the

Balance of payments. Pressure on the reserves, therefore, tended to reflect underlying trading problems

Of the country in question, or sometimes the expectation of a fall in the exchange rate which led

People to sell their holdings in the currency. Today, however, currencies are more freely traded than in

Former times, and the national reserves are not used to finance private transactions. As a result, the

Reserves are primarily seen as a tool for influencing the exchange rate. The authorities can use them to

Influence supply and demand on the foreign exchange market. Such intervention is bound to be of

Limited duration, but can serve a role as a signalling device, letting the markets know what the intention

Of the authorities is. The official published figures of reserves, however, do not necessarily reflect