Official foreign exchange reserves are maintained in any country in order to achieve a set of objectives such as support and maintain confidence in the monetary and exchange rate policies, limit external vulnerabilities by maintaining foreign currency liquidity to absorb shocks during times of crisis, to provide a level of confidence to markets, demonstrate the backing of domestic currency by external assets and meeting its foreign exchange needs and external debt obligations.
As a result of these new standards, we have seen a fall in asset values of insurance companies, which has reduced their solvency surplus in 2006. Those affected by this development will need to revalue both sides of their balance sheets and take immediate measures to bring their solvency surpluses to the required level.