IMF Urges Nations to Preserve Foreign Reserves as Dollar Surges

Governments need to hold on to their foreign exchange holdings for potentially worse bouts of outflows and market volatility in the future even as the dollar surges, according to the International Monetary Fund.

The warning came in a blog post by IMF First Deputy Managing Director Gita Gopinath and the fund’s chief economist, Pierre-Olivier Gourinchas, who urged governments to reinstate swap lines with advanced economy central banks or avail of the IMF’s precautionary lines to ensure they have liquidity. While temporary interventions can be appropriate, other reforms will be needed, the duo said.