List of countries by foreign-exchange reserves Wikipedia

Japan has a very robust economy standing at third place in an economic count. The change in the fiscal policy of the country may also affect the foreign exchange reserves. However, it may also include the drawing rights and the IMF reserve condition. 2/ The items, “2. IMF Reserve Position” and “3. Special Drawing Rights (SDRs),” are based on data provided by the IMF and are valued in dollar terms at the official SDR/dollar exchange rate for the reporting date. The entries for the latest week reflect any necessary adjustments, including revaluation, by the U.S. U.S. foreign exchange reserves totaled $247 billion, as of March 25, 2022, compared to China’s over $3 trillion.

The country’s reserves act as a buffer against any potential economic shocks and help maintain the stability of the yen. Japan’s forex reserves are also influenced by its massive holdings of US government bonds, as it is one of the largest buyers of US debt. The world’s largest current foreign exchange reserve holder is China, a country holding more than $3 trillion of its assets in a foreign currency. One of the reasons for this is that it makes international trade easier to execute since most of the trading takes place using the U.S. dollar.

1. And since all the figures below are in U.S dollar equivalents, exchange rate fluctuations can have a significant impact on these figures.
2. For one thing, by investing heavily in foreign reserves, a country invests less in its own economy—possibly spending less on education, healthcare and infrastructure—which may have otherwise offered a route to longer-term growth.
3. Ample IRs allow a government to manipulate exchange rates—usually to stabilize rates and provide a more favorable economic environment or to purchase its domestic currency to protect the country from an attack by speculators.

Japan has accumulated large forex reserves due to its export-oriented economy. 1/ Includes holdings of the Treasury’s Exchange Stabilization Fund (ESF) and the Federal Reserve’s System Open Market Account (SOMA), valued at current market exchange rates. Foreign currency holdings listed as securities reflect marked-to-market values, and deposits reflect carrying values. On the other end of the spectrum, countries with the smallest cash and gold reserves include Burundi, Samoa, and many other island-states. Island-states and other poorer countries are disproportionately affected by climate change and health emergencies, with little to no financial capability to address those issues.

The country has built up its reserves through its large current account surplus and its interventions in the currency markets. India has forex reserves worth over $588 billion as of now, making it the fifth country with the largest forex reserves. India’s has accumulated forex reserves through its foreign investments and significant foreign portfolio inflows. With forex reserves worth over $548 billion, Taiwan has the sixth largest forex reserves in the world.

China began reducing its forex reserves in July 2014 over concerns that the forex reserve level was too high. In January 2017, Chinese forex reserves dipped below $3 trillion briefly and have since remained above that level. The images below shows the timeline of their reserves since the earliest available forex data.

Here are the 10 countries with the largest foreign currency reserve assets. Inadequate reserves can also limit a central bank’s available responses in the event of an economic crisis. China was the second country to reach $500 billion and the first to reach $1 trillion in reserves. China is also the only country that reached net reserves of $2 trillion and $3 trillion. Chinese forex reserve reached over $3.993 trillion and possibly reached $4 trillion before July 2014 but there was no official figures to confirm it. Mexico is home to some of the largest foreign reserves in 2023 and effective monetary policy has allowed the Mexican peso to overcome interest rate pressure and global inflation.

Thus Saudi Arabia has not amazed us by standing on third with being given a huge natural resource capacity naturally. Our free, fast, and fun briefing on the global economy, delivered every weekday morning. Industry-specific and extensively researched technical data (partially from exclusive partnerships).

There are various reasons that countries have foreign reserves including ensuring that their own currency value remains constant at a fixed rate. For example, China has pegged its currency, the yuan to the U.S. dollar, the most valuable currency in the world, and has been so since the end of World War 2. It then buys and stockpiles U.S. dollars to increase the value of the U.S. dollar against the yuan which in turn makes exports cheaper and more competitive. Similarly, other countries such as Japan also buy U.S. dollars despite implementing a floating exchange rate, which ensures that the yen remains cheaper as compared to the dollar, and hence allows its exports to be more competitive too. Forex reserves, also known as foreign exchange reserves or international reserves, are assets held by central banks and monetary authorities to meet their international payment obligations and stabilize their domestic currencies. These reserves are usually denominated in foreign currencies such as the US dollar, euro, or yen, and can also include gold and other valuable assets.

Why do countries hold reserves?

Foreign currencies are not the only form of asset at a government’s disposal. These assets can include gold, special drawing rights (SDRs), and reserve positions in the IMF. However, foreign currency is the most abundant asset in most foreign reserves, and most nations hold the vast majority of their foreign currency reserves in U.S. dollars, followed by euros and the Japanese yen. Foreign currencies are not the only form of asset at a government’s disposal. International reserves are a country’s “external assets”—including foreign currency deposits and bonds held by central banks and monetary authorities, gold and SDRs. The top 10 holders of international reserves account for nearly two-thirds of the world’s total foreign currency reserves.

South Korea

Pakistan also suffered from catastrophic floods that amounted to more than $30 billion of losses in the country in 2022. Disastrous monetary policies amid political turbulence led to the pound sterling falling heavily in 2022, and in September reached its lowest-ever level against the U.S. dollar, though it has recovered somewhat since. It is also ranked among the top 20 of the world’s most powerful countries economically.

It has the second-largest of the world’s GDP and very high purchasing capacity. With forex reserves worth over $600 billion, Russia has the fourth largest forex reserves in the world. South Korea’s forex reserves are worth over $449 billion, making it the ninth country with the largest forex reserves in the world as of 2022. A country might draw down its foreign reserves if it needs to sell them in order to stabilize its currency top 10 foreign reserve country or prop up its economy, especially if the domestic currency falters. The list below is mostly based on the latest available IMF data, and while most nations report in U.S. dollars, a few nations in Eastern Europe report solely in Euros and some others report in their respective currencies. And since all the figures below are in U.S dollar equivalents, exchange rate fluctuations can have a significant impact on these figures.

Foreign exchange reserves are also called Forex and are the major yardstick to measure any country’s fiscal power or strength. The country’s reserves are primarily driven by its strong IT and service sectors, as well as its significant remittances from overseas Indians. India’s central bank, the Reserve Bank of India (RBI), actively manages its forex reserves to maintain the stability of the Indian rupee. Countries that aren’t in the most dire situations could still be in trouble when the next crisis occurs. Bolivia, for example, has barely enough cash reserves to cover three months’ worth of imports, prompting its central bank to sell US dollars to individuals to bring up its exchange rate.

The country is ready to face any economic jolts and is using the huge reserves as the buffer. Hong Kong has forex reserves worth over $504 billion, seventh largest in the world as per 2022 data. Amid rising geopolitical uncertainty and rising interest rates, Thailand’s central bank has begun to use gold as a hedge against war and inflation, with its gold reserves doubling since 2019. Amid its war with Gaza, Israel’s central bank sold $30 billion of foreign reserves to support the Israeli shekel.

Top 10 Countries with the Highest Forex Reserves: A Comprehensive Analysis

Russia’s foreign exchange reserves are held mostly in U.S. dollars, much like the rest of the world, but the country also keeps some of its reserves in gold. Since gold is a commodity with an underlying value, the risk in relying on gold in the event of a Russian economic decline is that the value of gold will not be significant enough to support the country’s needs. As of February 2022, Russia’s foreign exchange reserves totaled some $630 billion.

Countries With Highest Forex Reserves

Its gross domestic product is the seventh-largest according to statistics. Brazil in the past has been one of the fastest-growing economies in the world however nowadays its growth has been a bit slow, but it’s going up and up with further increments. The country’s total foreign reserves are at $3726 billion thus topping the list in highest Forex reserves. China is regarded as one of the biggest and fastest economies developing day by day.

The country’s reserves are primarily driven by its trade surplus and foreign capital inflows. Taiwan’s central bank, the Central Bank of the Republic of China (Taiwan), actively manages its reserves to maintain the stability of the New Taiwan dollar and support the country’s export-oriented economy. As the world’s second-largest economy and a major global exporter, China has accumulated massive reserves to ensure financial stability and support its currency, the yuan. The country’s forex reserves are mainly driven by its trade surplus and foreign direct investments. Foreign exchange reserves (also called Forex Reserves) are assets that are held on reserve by a central bank.

Very high reserves, while assuring in the recent financial downturn, can also have negative implications for the holder of the reserves and for the global monetary system. For one thing, by investing heavily in foreign reserves, a country invests less in its own economy—possibly spending less on education, healthcare and infrastructure—which may have otherwise offered a route https://1investing.in/ to longer-term growth. For another, with most reserves held in US dollars, a stronger US dollar has been supported despite high current account deficits in the US, contributing to global economic imbalances. To determine the countries with the largest foreign reserves in 2023 by country, we determined the holdings of each country via information from their central bank.