Asian central banks build dollar war chests

Central banks in South Korea and New Zealand have said their improving economies may eventually justify higher interest rates.

MANILA: Asia’s emerging economies have accumulated their highest level of foreign-exchange reserves since 2014, offering a powerful buffer against market volatility if the United States Federal Reserve (Fed) changes course.

Central bank holdings of foreign currencies in the region’s fast-growing emerging economies hit US$5.82 trillion (RM23.96 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 US$2.6 trillion (RM10.70 trillion).