Emerging-Market Slump Shows IMF Reserves Endorsement Little Help
- India’s solid stockpile hasn’t prevented a slump in rupee
- Malaysia’s reserve shortfall contrasts with strong growth rate
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Ever since Thailand ushered in the Asian financial crisis by burning through its foreign-exchange reserves, those stockpiles have served as a gauge of resilience when turmoil erupts. This time round, the measure is looking shaky.
Sure, there’s good correlation between the relatively low holdings in Argentina and Turkey and the slide in their assets. But India has the worst-performing exchange rate in Asia so far this year, and it has almost double the reserve "adequacy" ratio set by the International Monetary Fund. Asia’s top performer, after the safe-haven yen, is the ringgit -- despite Malaysia’s reserves being almost as sub-par in the IMF’s calculation as Argentina’s.