IMF: Thailand, Philippines lead in Asia’s currency-reserve stockpile
SINGAPORE: Less than a decade ago, the International Monetary Fund (IMF) used to talk about Asian countries piling up too much in their currency-reserve stockpiles.
The global financial crisis turned that conclusion on its head, and now that United States interest rates are poised to keep climbing, the race is on to identify which countries have the strongest buffers against capital flowing out towards developed markets.
A measure developed by the IMF itself shows that Thailand and the Philippines may be best placed to withstand further downward pressure on the emerging currencies in Asia, based on calculations taken before the Donald Trump-induced US reflation play roiled the foreign-exchange market.
The IMF last month forecast Thailand’s reserves at US$163.3 billion (RM727.5 billion) at year-end, compared with the US$64.9 billion needed according to the Assessing Reserve Adequacy gauge, which incorporates criteria from short-term debt to money supply, imports and investment flows. The Philippines was heading for a US$84 billion hoard, against a US$31 billion need.
“In this broad trend of the dollar strength, the currencies of countries Thailand and the Philippines may be
from the United States reflation play. that have plenty of reserves will probably perform better than others,” said SBI Securities Co general manager of fixed-income department Tsutomu Soma.
The measure shows Malaysia has a US$100 billion reserves projection against short-term external debt of US$128.2 billion, IMF estimates.
Looking beyond Asia, Turkey, South Africa and Mexico are among those deemed more vulnerable by the assessments.
“Both Thailand and the Philippines increased their reserves in the last couple of years and have adequate buffers to intervene to smooth currency volatility,” said Australia & New Zealand Banking Group Ltd head of Asia research Khoon Goh,
Malaysia’s reserves are well down from a May 2013 high, and the slimmer adequacy ratio “limits the ability for Bank Negara Malaysia to intervene”, he said. Bloomberg