admin answers:

In finance, the exchange rates (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies specifies how much one currency is worth in terms of the other. For example an exchange rate of 123 Japanese yen (JPY, ¥) to the United States dollar (USD, $) means that JPY 123 is worth the same as USD 1. The foreign exchange market is one of the largest markets in the world. By some estimates, about 2 trillion USD worth of currency changes hands every day.

admin answers:

By definition, foreign exchange reserves are those funds the government sets aside for use in the currency (foreign exchange) market to defend against attacks on its currency.

Http://en.wikipedia.org/wiki/Foreign_exchange_reserves

But there is nothing that forces a country to put all its trade surplus funds into its reserves. It can do with that whatever it likes with its money. And just because the government put money into the reserves, doesn’t mean it can’t take the money back out and use it for other things as the perceived need for large reserves decreases.

On the other hand, it is not considered good policy to use foreign exchange reserves as a savings account, etc:
http://www.bangkokpost.com/business/economics/166949/argentina-central-bank-chief-resigns-amid-debt-row