Even though Asia hasn’t been affected by the financial crisis as much as the United States or Europe, foreign investors are still shy to bank their money in the region. A recent Reuters analysis on central bank data pointed out that foreign exchange reserves in Asia (excluding China) plummeted by US$119 billion in October to US$2.34 trillion.
India led the fall, dropping forex reserves by US$38.9 billion, while South Korea marked a drop of US$27.4 billion. Singapore, Malaysia, Indonesia and Pakistan were other countries in the region which reported a decrease in their forex holdings as compared to the same time last year. China, holder of the world’s largest reserves, releases data at the end of every quarter.
Foreign investors have sold US$63 billion worth of shares in Asia ex-Japan so far this year, led by the sale of US$33 billion in South Korea, nearly US$14 billion in Taiwan and almost US$12 billion in India, Reuters quoted Nomura.
Analysts attribute the drop in Asian foreign reserves to foreign investors and hedge funds who are forced to pull out of Asia’s stock and bond markets in order to raise cash for their operations beleaguered by the U.S. financial crisis.
Asia’s overall holdings of foreign exchange reserves, including China’s holdings until September, reached US$4.2 trillion last month, still up 8 percent from the end of 2007, Reuters data showed.
