Asian Central Banks, which have accumulated foreign exchange reserves for years, are melting reserves to curb the depreciation of their currencies against the dollar.
According to the data released last week, Thailand’s foreign exchange reserves decreased to 221.4 billion dollars as of June 17. This was the lowest level in more than two years. Figures released monthly in Indonesia show reserves are at their lowest level since November 2020. Reserves in South Korea and India fell to their lowest level in more than a year, while Malaysia saw the most significant decline since 2015.
Central Banks, who learned from the Asian crisis in 1997, started to accumulate dollars to support their currencies during periods of sharp fluctuations. This year’s ‘hawk’ US Federal Reserve’s interest rate hikes have reversed this trend. Thailand and Indonesia have committed to reducing volatility in their currencies. The Philippine Central Bank only intervened during periods of volatility while allowing the market to determine the peso’s value.
Regional currencies have been at their lowest levels in many years. The Philippine peso fell to its lowest level since 2005 on Monday, while the Indian rupee fell to a record low last week.
