The following is an excerpt from Montiel's Macroeconomics in Emerging Markets (1st edition):
B: Privately owned bonds
DC: Government bonds held by the central bank
sB*: Bonds held by foreigners, valued in foreign currency
P(G - T): Primary deficit
i: Interest rate for privately owned bonds
i': Interest rate for bonds held by foreigners
sR*: Foreign reserves, valued in foreign currency
Δ: Variation
Foreign reserves are held by the central bank, not by the treasury. Then, why do variations in foreign reserves affect the government's budget constraint?