Global foreign-currency reserves are falling at the fastest pace on record as central banks from India to the Czech Republic intervene to support their currencies, according to a detailed Bloomberg report. Reserves have declined by about $1 trillion, or 7.8%, this year to $12 trillion.
Part of the slump is simply due to valuation changes. As the dollar jumped to two-decade highs against other reserve currencies, like the euro and yen, it reduced the dollar value of the holdings of these currencies.
But the dwindling reserves also reflect the stress in the currency market that is forcing a growing number of central banks to dip into their war chests to fend off the depreciation.
India’s stockpile, for example, has tumbled $96 billion this year to $538 billion.