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Topic: Foreign exchange reserves

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	China's foreign exchange reserves
		At the start of the reform era at the end of 1978, China's foreign exchange reserves were minimal, but enough to cover the requirements of a country with a very small import bill.
		The economic slowdown of 1989-91 produced a sharp fall in imports in 1990, while exports continued to rise, producing a merchandise trade surplus for that year of US$9.2bn, which was gradually eroded in the next three years as imports rose faster than exports.
		By 1993 the trade and current accounts were in deficit, but the acceleration in inward FDI flows kept foreign exchange reserves rising for most of the rest of the decade.
	www.chinability.com /Reserves.htm (298 words)

	Foreign exchange reserves - Wikipedia, the free encyclopedia
		Foreign exchange reserves are the foreign currency deposits held by central banks and monetary authorities.
		These are assets of the central banks which are held in different reserve currencies such as the dollar, euro and yen, and which are used to back its liabilities eg the local currency issued, and the various bank reserves deposited with the central bank, by the government or financial institutions.
		The purpose of reserves is to allow central banks an additional means to stabilise the issued currency from excessive volatility, and protect the monetary system from shock, such as from currency traders engaged in flipping.
	en.wikipedia.org /wiki/Foreign_exchange_reserves (451 words)

	Guidelines for Foreign Exchange Reserve Management
		Reserve management is a process that ensures that adequate official public sector foreign assets are readily available to and controlled by the authorities for meeting a defined range of objectives for a country or union.
		Reserve management should seek to ensure that: (i) adequate foreign exchange reserves are available for meeting a defined range of objectives; (ii) liquidity, market, and credit risks are controlled in a prudent manner; and (iii) subject to liquidity and other risk constraints, reasonable earnings are generated over the medium to long term on the funds invested.
		Reserve managers need to be certain that reserves can be liquidated in a prompt and efficient manner to provide the necessary foreign exchange for the implementation of policy objectives relating to, for example, market intervention, meeting balance of payments or debt servicing needs, or limiting external vulnerability.
	www.imf.org /external/np/mae/ferm/eng/index.htm (10313 words)

	FRB: Speech, Greenspan -- Currency reserves and debt -- April 29, 1999 (Site not responding. Last check: 2007-10-15)
		While the stock of foreign exchange reserves held by industrial countries has increased over time, those increases have not kept pace with the dramatic increases in foreign exchange trading or gross financial flows.
		Forward foreign exchange transactions should be recognized as liabilities, while such things as contingent credit lines, if they are truly available on demand, should be counted as foreign currency assets.
		This means that the foreign currency assets and liabilities of financial intermediaries that have access to the safety net--e.g., banks--probably ought to be included in the scope of the analysis.
	www.federalreserve.gov /BoardDocs/Speeches/1999/19990429.htm (2948 words)

	Foreign Exchange Reserves in East Asia: Why the High Demand? (2003-11, 04/25/2003)
		Those who support holding large reserve balances argue that the cost of doing so is small compared to the economic consequences of a sharp depreciation in the value of the currency that is often associated with financial crises in emerging markets.
		A third factor is vulnerability to external shocks; reserve holdings are likely to increase with a country's average propensity to import, which is a measure of the economy's openness and vulnerability to external shocks.
		Greater exchange rate variability was associated with significantly reduced reserve holdings.
	www.frbsf.org /publications/economics/letter/2003/el2003-11.html (1698 words)

	Currency Composition of Official Foreign Exchange Reserves (COFER)
		Foreign exchange reserves in COFER consist of the monetary authorities’ claims on nonresidents in the form of:
		Foreign exchange reserves in COFER do not include holdings of a currency by the issuing country.
		For instance, the U.S. dollar assets of the Federal Reserve and the euro assets of the European Central Bank and member countries of the European Economic and Monetary Union are not foreign exchange reserves.
	www.imf.org /external/np/sta/cofer/eng/index.htm (632 words)

	Maintaining foreign exchange reserves : Flawed rationale -DAWN - Business; August 11, 2003
		The articles explained, at length, the rationale behind the current policy on maintenance of foreign exchange reserves, to the policy’s critics as well as the uninitiated readers who were likely to be misled by the criticism of the policy.
		Towards the end of the last article in the series, the basis of the policy favouring accumulation of foreign exchange reserves was aptly summed by saying “there is an inherent trade-off in the short run between debt reduction strategy and public sector-led growth acceleration strategy.
		It is undeniable that building exchange reserves by withholding vitally needed expenditure on sustaining the country’s dwindling infrastructure, has dampened the investment climate, halted creation of large new businesses and jobs, and multiplied social problems that the State now seems hard put to resolve.
	www.dawn.com /2003/08/11/ebr1.htm (1822 words)

	The management of foreign exchange reserves
		Questions about the management of foreign exchange reserves are likely to acquire increased prominence among the range of issues facing many central banks.
		An important limitation of such analysis, as well as of this paper, is that the focus of attention is mainly on small economies, rather than on countries large enough to significantly influence foreign variables or whose own currencies serve as important international reserve assets or as a medium of exchange in international transactions.
		These include the nature of the exchange rate regime, the external exposure of the economy, the flexibility of the economy in adjusting to or privately financing external payments imbalances, the extent of constraints on international trade and capital flows and, lastly, the opportunity cost of holding reserves.
	www.bis.org /publ/econ38.htm (540 words)

	The Epoch Times \| Problems With China's Foreign Exchange Reserves
		Foreign exchange reserves might be regarded as savings in the case of other countries, but they cannot be counted as savings for China because China's system has an issue: Foreign currency cannot be freely exchanged in China.
		It is the reserve of yuan in circulation.
		In a nutshell, the state of foreign exchange management in China appears to be in the first or second stage, which is extremely low.
	www.theepochtimes.com /news/6-11-7/47852.html (1086 words)

	China's Foreign Exchange Reserves Top Japan's to Become World's Largest \| Asian American Daily \| GoldSea (Site not responding. Last check: 2007-10-15)
		China's foreign currency reserves rose 34 percent in 2005 to a record high $818.9 billion (euro681 billion) amid surging exports.
		Foreign reserves have soared as China's ballooning exports have brought home billions of U.S. dollars and other foreign currencies.
		Analysts estimate that three-quarters of China's reserves are in U.S. Treasuries, reflecting the dominance of the dollar as a reserve currency.
	goldsea.com /Asiagate/603/29exchange.html (707 words)

	Norges Bank - Foreign exchange reserves - Reports
		The foreign exchange reserves have one fundamental purpose: they shall be available for interventions in the foreign exchange market in connection with the implementation of monetary policy or in the interest of promoting financial stability.
		The reserves will only be used for this purpose in exceptional cases, and the probability of their being used is therefore small.
		It seems reasonable that the return and risk associated with the foreign exchange reserves should be measured in terms of a broadly diversified currency basket, since this will contribute to maintaining satisfactory preparedness for intervention.
	www.norges-bank.no /english/reserves/foreign_exchange/strategy.html (1928 words)

	Reserve Bank of India (Site not responding. Last check: 2007-10-15)
		Rangarajan, erstwhile Governor of Reserve Bank of India, had suggested that, while determining the adequacy of reserves, due attention should be paid to payment obligations, in addition to the traditional measure of import cover of 3 to 4 months.
		The ratio of short-term debt to foreign exchange reserves declined from 146.5 per cent at end-March 1991 to 4.2 per cent at end-March 2004 but increased slightly to 5.3 per cent as at end-March 2005 and further to 7.0 per cent as at end-March 2006.
		The foreign exchange reserves are invested in multi-currency, multi-asset portfolios as per the existing norms, which are similar to international practices in this regard.
	www.rbi.org.in /scripts/PublicationsView.aspx?id=8540 (1633 words)

	The Epoch Times \| Experts Worry about China's World Largest Foreign Exchange Reserves
		Thus, the sharp increase in China's foreign exchange reserves has made those countries that have imported huge quantities of Chinese products and that have a trade deficit with China are more concerned about the exchange rate of China's currency, the Renminbi.
		China's trade surplus, foreign exchange reserves, and fluctuations in the value of Renminbi are the focal points of frictions between mainland China and western countries.
		It is obviously unusual that the ratio of China's foreign exchange reserves to its GDP surpassed that of Japan.
	www.theepochtimes.com /news/6-4-9/40275.html (764 words)

	Enhanced Foreign Exchange Reserves Disclosure - Backgrounder
		Total reserves held in the form of foreign currency bank deposits will be disaggregated by three types of counterparties: (i) other central banks and the Bank for International Settlements, (ii) banks headquartered in Canada, and (iii) banks headquartered outside Canada.
		Total foreign exchange liabilities coming due within one year will be disaggregated into three maturity buckets (i.e., due within one month, one to three months and three to twelve months).
		Details on official government intervention in foreign exchange markets were previously disclosed only on an annual basis in the Exchange Fund Account annual report.
	www.fin.gc.ca /news99/data/99-038_1e.html (869 words)

	FT.com / Asia-Pacific / China - Report: China forex reserves world?s biggest
		The disclosure of the surge in reserves coincided with?the emergence of a lengthy defence of?exchange rate policy by Zhou Xiaochuan, the governor of the People?s Bank of China, delivered last week in a speech to foreign business executives.
		The continued rapid build-up of foreign exchange reserves this year suggests that speculative inflows, although they have abated somewhat, are?still strong.
		Mr Zhou said in his speech that high levels of foreign reserves in Asia were driven by the scarring experience of the Asian financial crisis in the late 1990s, and by different investment and savings regimes.
	www.ft.com /cms/s/9a920486-be53-11da-b10f-0000779e2340.html (599 words)

	Foreign Exchange Reserves (Site not responding. Last check: 2007-10-15)
		The Bank of Korea (BOK) said on Monday (Sept. 3) the country's foreign exchange reserves are expected to post more than $100 billion during September as South Korea has finished the repayment of loans from the International Monetary Fund (IMF).
		The foreign exchange holdings reached $99.02 billion as of the end of August, the central bank said.
		However, the strength of the yen and euro will be an important variable for foreign exchange reserves to surpass the $100 billion mark due to the nation's holdings in these currencies, a BOK official said.
	coweb.math.gatech.edu:8888 /tfe/450 (170 words)

	Drain on foreign exchange reserves -DAWN - Business; March 20, 2006
		The open market exchange rate in 1992 was $1for Rs24 which by May 28,1998 rose up to $1 for Rs64 resulting in the dollarization of the economy during 1997-1998.
		The F.E circular No 41 of 1998 is an example issued by the SBP under Sec 8 (2) of Foreign Exchange Regulations Act 194 regulating foreign currency when section four of Protection of Economics Reforms Act 1992 was not available at that timer.
		The SBP is the custodian and the caretaker of foreign exchange which should be given full discretion and authority to make laws regarding foreign exchange under the FERA, 1947.
	www.dawn.com /2006/03/20/ebr9.htm (773 words)

	The sticky paradox of foreign exchange reserves (Site not responding. Last check: 2007-10-15)
		However, the moment the CBN Chief began to outline the bank’s effort in the management of the nation’s external reserves not quite a few among the audience were comfortable anymore.
		He explained that in essence the external reserves are the dollar component of the already monetized fund distributed to various tiers of government from the Federation Accounts plus the undistributed parts.
		According to him, a high external reserves level serves as a veritable barometer signaling to foreign investors that such a nation is a good investment destination since high reserves level is a good indication of the investors’ confidence in the economy.
	www.businessdayonline.com /?c=53&a=9512 (932 words)

	On the Need for an International Lender of Last Resort -- Stanley Fischer
		Further, the assumption that the exchange rate was stable profoundly affected economic behavior in those countries, especially in the banking system, and contributed to the severity of the post-devaluation crises.
		There is a tradeoff between the greater short-run volatility of the real exchange rate in a flexible rate regime versus the greater probability of a clearly defined external financial crisis when the exchange rate is pegged.
		In many models, and in practice, the ratio of reserves to short-term external liabilities is an important factor determining the likelihood of a financial crisis (Calvo, 1995).
	www.imf.org /external/np/speeches/1999/010399.htm (10692 words)

	SSRN-The British Foreign Exchange Reserves Puzzle by Felix Hüfner (Site not responding. Last check: 2007-10-15)
		The British foreign exchange reserves decreased by 40 percent during the period August 1996-December 1999 although the Pound Sterling is considered a floating exchange rate since it left the EMS in 1992.
		Since changes in the level of foreign exchange reserves are usually taken as indicators for foreign exchange interventions in the economic literature we investigate the case of the British reserves in detail.
		However, even after estimating the effects of exchange rate fluctuations and interest earnings and correcting for government transactions we still find a considerable decrease in the UK reserves that is not explained by either the Bank of England or HM Treasury.
	papers.ssrn.com /sol3/papers.cfm?abstract_id=379383 (350 words)

	Foreign reserves
		The Reserve Bank of New Zealand Act enables the Reserve Bank to intervene in the foreign exchange market and requires the Reserve Bank to hold foreign exchange reserves to provide the capacity to intervene.
		A selection of briefing materials relating to the Government's recent decision to increase foreign reserves and to provide the Reserve Bank with the capacity to use foreign exchange intervention as an additional monetary policy tool.
		Data providing information on New Zealand's external position, including international reserves and foreign currency liquidity, selected account positions at the IMF and the liabilities owed by New Zealand residents to non-residents arising from the acquisition of foreign financial resources and/or goods and services.
	www.rbnz.govt.nz /finmarkets/foreignreserves (209 words)

	FT.com / World - China signals reserves switch away from dollar
		In a brief statement on its website, the government's foreign exchange regulator said one of its targets for 2006 was to “improve the operation and management of foreign exchange reserves and to actively explore more effective ways to utilise reserve assets”.
		It went on: “[The objective is] to improve the currency structure and asset structure of our foreign exchange reserves, and to continue to expand the investment area of reserves.
		It gave no more details about whether this meant a big shift in the investment strategy for Chinese reserves, which according to local press reports reached nearly $800bn at the end of last year and are expected by economists to near $1,000bn this year.
	news.ft.com /cms/s/f39fa8e4-7e25-11da-8ef9-0000779e2340.html (711 words)

	Norges Bank - Foreign exchange reserves (Site not responding. Last check: 2007-10-15)
		The foreign exchange reserves shall be available for interventions in the foreign exchange market in connection with the implementation of monetary policy or in the interest of promoting financial stability.
		The foreign exchange reserves are divided into a money market portfolio and an investment portfolio.
		The investment portfolio accounts for the largest portion of the foreign exchange reserves, and is managed along with the petroleum buffer portfolio by Norges Bank Investment Management.
	www.norges-bank.no /english/reserves/foreign_exchange (121 words)

	Managing foreign exchange reserves: a basic guide to the process. \| Finance from AllBusiness.com (Site not responding. Last check: 2007-10-15)
		This process was fueled by the desire of central bank authorities to maintain the real value of their reserve assets, or at least to increase their nominal returns during a period when world liquidity was rising sharply.
		The approach to the management of foreign exchange reserves by central bankers varies across the globe, ranging from a policy of benign neglect to detailed and highly mathematical calculations of alternative moves to reduce risk and increase profitability.
		Since there is an implicit economic or opportunity" cost in holding reserves, measured in terms of the returns from their alternative domestic use, an important objective must be to compensate for this cost by managing the reserves portfolio as profitably as is prudently possible.
	www.allbusiness.com /finance/109955-1.html (632 words)

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