Learning from the 1997 Asian financial crisis, central banks have been accumulating dollars to help defend their currencies during periods of wild market swings.
After years of building their foreign-exchange reserves, central banks in Asia are tapping into their stockpiles to bolster their weakening currencies against a rising US dollar.
“Some countries would have used their reserves to stabilise their currencies when moves were excessive,” said Rajeev De Mello, a global macro portfolio manager at GAMA Asset Management in Geneva. “They know that they can’t reverse their currencies’ weakness against the USD, but they can smooth the declines.”
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