, Columnist
$3 Trillion Can't Buy China Out of Virus Trouble
Asia’s foreign-exchange reserves are more a symptom of economic problems than a sign of strength.
It’s not much use if you can’t spend it.
Photographer: Chung Sung-Jun/Getty Images AsiaPacThis article is for subscribers only.
Asia’s emerging-market currencies are sliding as the coronavirus outbreak threatens to slow the region’s economy and drives outflows into the dollar. Investors may consider the region’s copious foreign-exchange reserves to be a buffer against severe economic dislocation, capital flight and currency fluctuations. That would be a mistake.
Asia’s reserves have expanded vastly since the 1997-98 financial crisis to reach more than $5 trillion, 40% of the global total. Often cited as a strength, they may prove of limited value in any future crisis.