This is my hypothesis, posted on another thread a while ago:
I haven’t seen it around clearly exposed, but I figure that those 700 BTCs are meant to back the existing BTCs within the Chivo system, and not so much intended to hold as part of the countries reserves. With now over 1,1 Million Chivo wallet users, presumably nearly all will have redeemed their 30$ in bitcoin voucher, so the 700 BTCs kind of backs current redemptions (roughly, give or take).
While the media keep on making it look like El Salvador is accumulating bitcoin in its reserves much like Microstrategy or Tesla, they are likely covering what needs to be done to back the virtual BTCs people have in their Chivo wallets. The government passed a bill to reserve 150M $ to the Bitcoin Law rollout, so I figure this is part of it.