This study examines how the foreign currency denomination of external debt influences the currency composition of foreign exchange reserves (FXR). We follow the Gopinath and Stein (2018) framework to construct a theoretical model in which central banks consider the buffer-stock role of FXR when...

This paper studies the effects of external debt currency denomination on the currency composition of foreign exchange reserves (FXR). We construct a theoretical model in which central banks consider the buffer-stock role of FXR when managing their currency composition of FXR. The model predicts...