Emerging market FX reserves fall this year passes the $500 bln mark

Tue Dec 15, 2015 9:18am EST
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* reut.rs/1QH5zhn

By Jamie McGeever and Sujata Rao

LONDON Dec 15 (Reuters) - The world's biggest emerging markets have run down their foreign exchange reserves by more than half a trillion dollars this year, as policymakers seek to mitigate capital outflows stemming from the oil and commodity price slump.

Data compiled by Reuters show that central bank reserves in 15 of the largest emerging economies are down $514.1 billion from the end of last year, including $400 billion from China.


Emerging markets are on course to record their first year of net capital outflows since 1988, according to the Institute of International Finance. It estimates a net outflow of $540 billion.

Renewed weakness in commodity and oil prices in recent weeks has revived investors' concerns over the economic and financial health of many of these countries, compounding the downward pressure on growth, their currencies and reserves.

"FX reserve depletion will continue as a theme broadly speaking, not only in China but outside China," said Nikolaos Panigirtzoglou, strategist at JP Morgan.

"The weaker renminbi has become the de facto benchmark for emerging market FX. There's only one way to go for EM currencies, and that's down."   Continued...