Foreign Exchange Excess Reserves

The foreign exchange excess reserves indicate a country’s ability to repay foreign debt taken for various purposes and the currency defense. The excess forex reserves are used to figure out the credit ratings of a country. However, the other types of funds which are considered as liquid assets may be applied to the liabilities when required or during crisis period include the stabilization funds which are also called as the sovereign wealth funds.

In case the sovereign wealth funds are also included into excess reserves in forex, then the countries such as Norway and Persian Gulf States will be having higher rankings in the list of countries which are at the top positions on the basis of excess reserves in foreign exchange possessed by them. The United Arab Emirate’s trillion dollar company Abu Dhabi Investment Authority would be enjoying the second position after China. The government of Singapore also has a good amount of funds which makes its excess reserves in forex. Another rising economy of the world, India is also looking forward to create its own investment firm using its excess forex reserves.

The foreign exchange reserves are also known as the forex reserves in case only those foreign currency deposits are considered which are held by central banks and other monetary agencies. Although, the term foreign exchange reserves most often also comprises of gold, SDRs and IMF reserve position. These funds are also involved in excess forex reserves figures as it is easily available. However, the important thing to note is that it has been accurately called as official reserves or international reserves. And the figures don’t contain currency swaps conducted by central banks.

The foreign exchange excess reserves are seen as the assets of a country which are in the form of several reserve currencies like the dollar, euro, pound or yen and other currencies which are used to back its liabilities. Mentioned below are some of the countries and territories having the largest excess reserves in forex.

China
Japan
Eurozone
Russia
China
Indoa
Douth Korea
Braxil
Hong Kong
Germany
Singapore

We hope that the above stated information helped you to learn insight into the info regarding foreign exchange excess reserves.