Indian reserves rise in Q1, Russia sees biggest drop

Written by Reuters | London | Updated: Apr 18 2014, 04:06am hrs
Hard currency reserves in emerging economies inched up in the first quarter of 2014 as investment flows returned after a bruising 2013 though overall reserves across emerging markets declined slightly.

Reserves accumulation in emerging economies have been slowing down in recent years as a result of slower trade and investment. Data compiled by Thomson Reuters shows that accumulation is happening mostly in Mexico, South Korea and Taiwan, which benefit from the U.S. economic recovery.

However, Indian reserves grew by around $13 billion or 4.6 percent from end-December levels because of heavy foreign buying of stocks and bonds ahead of elections expected to deliver a more reform-friendly government.

India, Turkey, Brazil and South Africa bore the brunt of last year's emerging markets sell-off. Indonesian reserves grew $3 billion in the first quarter though they are down from a year ago.

The most spectacular rise was in South Korea whose reserves jumped almost $30 billion in the past three months, or almost 10 percent of total reserves, according the following graphic based on official data shows:

For TABLE on central bank reserves

Reserves posted the sharpest fall in Russia, dropping to $484 billion from $509 billion three months ago. In percentage terms Ukraine, Argentina and Nigeria saw the biggest declines from year-ago and end-2013 levels as central banks came under pressure to support their currencies or repay maturing debt.

Overall reserves in emerging economies excluding China fell by around $10 billion in the first 2014 quarter to $4.07 trillion, according the following graphic based on data from consultancy.

However, they are up from year-ago levels of $3.98 trillion, CrossBorder Capital said.