Most countries are always trying to build up their foreign-exchange reserves. It is considered an important indicator of a country’s economic health. Forex reserves allow a nation to maintain liquidity during an economic emergency. They also make a country more attractive to foreign investors, and allow the country to control inflation and maintain the value of their local currency at a fixed rate. Here we take a look at the top 10 countries with the largest forex reserves.
Ranked: Countries with the largest forex reserves
Export-oriented economies tend to amass a lot of foreign currency. If a country holds enormous piles of foreign currency, it is in a stronger position to wield influence on international matters. The ranking below is based on data from the International Monetary Fund (IMF) and the official records from the respective countries’ central banks. It includes not only the foreign currency deposits but also gold reserves, special drawing rights (SDRs), and IMF reserve position to give a more meaningful view of a country’s reserves.
The forex reserves are held by the central banks and monetary authorities of a country. The reserves fluctuate frequently based on the currency exchange rates, international trade, and other factors.
As of April 2019, the South American nation holds $378.9 billion in forex reserves, including gold, SDRs, and other reserves. Brazil is one of the world’s largest economies, but it has been struggling in the last few years due to rising unemployment and delayed fiscal reforms.
9- South Korea
South Korea has $404 billion in reserves as of April 2019, according to the Bank of Korea. It’s an export-driven economy and is home to electronics giants like Samsung and LG Electronics.
As per data from the Reserve Bank of India, the country holds $420.5 billion in forex reserves. The Indian economy is driven by domestic consumption. Its imports are significantly higher than exports. India receives around $70 billion of foreign currency in remittances from Indians living abroad every year.
7- Hong Kong
Hong Kong is the semi-autonomous, special administrative region (SAR) of China. It reports separate figures from China. Hong Kong holds $436 billion in forex reserves, which includes foreign currencies and other reserve assets. It doesn’t have much in gold reserves.
The island nation near China is an export-driven economy. It holds $464.8 billion in forex reserves, one of the highest in the world. Taiwan is home to electronics giants like Foxconn, Acer, Asus, and HTC.
The Russian Federation holds $494.7 billion in forex reserves. Russia is a major exporter of oil, natural gas, and metals. The Russian central bank is one of the largest hoarders of gold.
4- Saudi Arabia
Saudi Arabia has made its fortune and forex reserves because of oil and natural gas exports. It is one of the world’s largest producers and exporters of oil. It has $504.7 billion in forex reserves. The kingdom is making fundamental changes to its economy to prepare for the post-oil era.
Switzerland has the world’s third largest forex reserves. According to the International Monetary Fund, it holds $808.6 billion in reserves. It is the only European country to feature among the top ten. Since Switzerland is not part of the European Union, the Swiss franc has become a safe haven for European investors.
The Japanese yen is the world’s third most popular reserve currency, right behind the US dollar and Euro. But Japan still has $1.26 trillion in forex reserves, according to IMF. Japan is an export-driven economy, sending more than $650 billion worth of goods to other countries every year.
China is the world’s largest exporter. Its massive exports and trade surplus year after year has helped it build the world’s largest forex reserve. As of March 2019, it held $3.11 trillion in forex reserves, which is more than 2.5x that of Japan.
You might be wondering why the US and leading European nations such as Germany and France don’t feature among the top 10. The primary reason is that they don’t need to hoard other countries’ currencies because their own currencies (Dollar and Euro) are the most popular reserve currencies. Most of the international transactions take place in US dollar or Euro.