Research of the influencing factors of China's foreign exchange reserves based on Multiple linear regression analysis model

Abstract

Foreign exchange reserve is an important economic asset of a country. It plays an important role in regulating the balance of payments deficit, intervening in the foreign exchange market and maintaining the stability of the local currency. In real economic problems, a variable is often affected by multiple variables. Multiple linear regression model analyzes the influence of two or more influencing factors as independent variables on dependent variables, and the relationship between variables is linear. This paper uses multiple linear regression model to analyze the influencing factors of China's foreign exchange reserve. Based on the time series data from 2000 to 2019, this paper explains the relationship between GDP, total import and export, money supply, foreign debt balance and the amount of foreign direct investment and foreign exchange reserves. Therefore, it is necessary to do an in-depth study about the changes of the scale of China's foreign exchange reserves to strictly manage and effectively use China's foreign exchange reserves according to the actual situation of China, so as to promote the healthy development of China's foreign exchange market and China's economy.