Business Standard

Asian central banks build dollar war chests, prep for US Fed policy

India has built up foreign exchange reserves worth more than $600 billion, as its central bank cushions economy against any sudden outflows.

Asian Central bank
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When China’s cash pile is stripped out, emerging Asian central banks’ reserves stood at an all-time high of $2.6 trillion. (Photo: Bloomberg)

Claire Jiao | Bloomberg
Asia’s emerging economies have accumulated their highest level of foreign-exchange reserves since 2014, offering a powerful buffer against market volatility if the U.S. Federal Reserve changes course.

Central bank holdings of foreign currencies in the region’s fast-growing emerging economies hit $5.82 trillion as of May, their highest since August 2014. When China’s cash pile is stripped out, emerging Asian central banks’ reserves stood at an all-time high of $2.6 trillion.

While some of the gains reflect dollar weakness and bumper exports, policy makers are deliberately preparing their defenses, said Nicholas Mapa, an economist with ING Groep NV in Manila.

“Emerging

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