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These foreign currency deposits are the financial assets of the central banks and monetary authorities that are held in different reserve currencies e. g. the U. S. dollar, the Euro, the Japanese yen and the Pound sterling and which are used to back its liabilities e. g. USDJPY, USDCAD, USDCHF. The exceptions are the British pound GBP, Australian dollar AUD, the New Zealand dollar NZD and the euro EUR where the USD is the counter currency e. g. GBPUSD, AUDUSD, NZDUSD, EURUSD. None of the models developed so far succeed to explain exchange rates and volatility in the longer time frames.
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