Foreign exchange reserves at the Central Bank of Tunisia

Foreign exchange reserves are crucial to a country's financial and economic stability. This study uses the ARDL model to analyze the determinants of foreign exchange reserves between 1992 and 2022, based on 30 annual observations. The results show a positive influence of external debt, inflation, foreign direct investment flows and workers' remittances. On the other hand, the balance of current payments and the official exchange rate exert a negative influence. The main objective of this research is to determine the optimal composition of foreign exchange reserves in Tunisia for the pre- and post-pandemic periods, focusing on the currencies USD, EUR, JPY and GBP, then adding CNY, inspired by its inclusion in the SDR currency basket by the IMF.The results reveal that the optimal composition of the BCT's target portfolio, changed between the two periods studied. An increase in the share of JPY and a slight decrease in the shares of USD, EUR and GBP were observed.