The small increase in reserves reflects various accruals, interest earnings and valuation changes. This policy has served the economy well, as it has allowed the exchange rate to serve as a buffer, depreciating to help the economy when it was weak and appreciating to reduce excess demand when it was strong.
The policy has also minimized the danger that foreign inflows would be attracted by “one-way bets” on appreciation, or that domestic firms would borrow excessively from abroad without hedging their exposure.