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Asian central banks need broader foreign exchange defence as reserves slide

India is already estimated to have spent $75.1 bn this year supporting the rupee in the spot and forward markets, while China has probably spent $39.6 bn

Foreign Exchange (Bloomberg)
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Asian policy makers have bolstered their FX warchests in recent years following previous crises such as the 2013 taper tantrum (Bloomberg)

Subhadip Sircar | Bloomberg
Declining foreign-exchange reserves mean Asian central banks will probably start looking for alternative ways to support their currencies, according to Nomura Holdings Inc.
 
Some of the potential methods they may choose include mandating exporters to sell foreign-currency proceeds, placing restrictions on trade accounts, and introducing measures to boost capital inflows, Nomura analysts including Sonal Varma in Singapore and Ting Lu in Hong Kong wrote in a research note.

Asian policy makers have bolstered their FX warchests in recent years following previous crises such as the 2013 taper tantrum. Still, the rapid pace of Federal Reserve interest-rate hikes this year means

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First Published: Sep 28 2022 | 9:42 AM IST

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