Use dollar-denominated forex reserves wisely, IMF urges emerging economies

Asks these economies to reinstate swap lines with advanced economy central banks

Amid the dollar's appreciation to its highest level since 2000, the International Monetary Fund (IMF) has asked emerging and developing economies to prudently use their dollar denominated foreign exchange reserves, allowing the exchange rate to adjust.

A joint note released on Friday by IMF chief economist Pierre-Olivier Gourinchas and deputy Managing Director Gita Gopinath said central banks should intervene on a temporary basis when currency movements substantially raise financial stability risks or disrupt the ability to maintain price stability.

“Given the significant role of fundamental drivers, the appropriate response is to allow the exchange rate to adjust, while using monetary policy to