Forex Reader

The Central Bank said that the Gross international reserves at the end of November 2007 grew to a record level of $22.49 billion. This is even higher than the reserves of October end that stood at $22.31. The reserves comprise earnings from the central bank’s foreign exchange operations and investments abroad as well as from a bond issue of the government’s National Power Corp. Proceeds of a program loan from the Asian Development Bank also contributed to the reserves.

The bank feels that the reserves are adequate to last for 4.5 months’ worth of imports of goods and also for payments of services and income. The reserves account for nearly 4.1 times the country’s short-term external debt based on original maturity. The reserves also helped the central government to make early payments for Brady Bonds. The value of these was $ 165 million. The INQ7 Networks reports:

Governor Amando Tetangco of the central bank, Bangko Sentral ng Pilipinas, previously said the reserves could reach $24 billion at the end of 2007, compared with $22 billion projected this year. The reserves have risen 21.7 percent from an end-2005 level of $18.49 billion.”

– By Pushpa Sathish, Staff Writer

India would do well to increase the gold it holds as part of its foreign exchange reserves, according to S.S. Tarapore. The former director of the country’s central bank, the Reserve Bank of India, said that it was high time the country’s policy makers changed their perception that transactions in gold was a bad thing as opposed to dealings in US Dollars, Euros, Yen and Pound Sterling. He stressed on the long-term advantages of increasing the proportion of gold held, and plumped for raising the percentage from the current 3.6 percent to at least 10 percent of the total reserves. The Hindu reports:

Tarapore also said there should be a discussion paper prepared on gold, which should put out in fairly simple terms the costs of the present passive policy and what a proactive gold policy would deliver if the RBI were to undertake two way transactions in gold.

India’s central bank announced that the country’s foreign exchange reserves rose by $940 million to reach $166.482 billion as of September 22. The previous week ended September 15 saw the reserves rise by $404 million. The Reserve Bank of India said that foreign currency assets increased by $936 million to touch $159.175 billion on September 22. Business Standard reports:

Foreign currency assets in dollars include the effect of revaluation of non-US currencies such as euro, sterling, and yen held in reserves. Reserve position in the International Monetary Fund increased by $4 million to $768 million.

It has been noticed that the responsibility of managing forex transactions mainly fall on the shoulders of banking staff. The State Bank of Vietnam has taken some initiatives on this regard. Forty central bank officials are attending a training program in foreign exchange management organized and financed by a HCM City-based Taiwanese non-profit agency. The three-day program was launched in HCM City. It is being handled by Professor Sanrong Lii of Soochow University who is also president of the Asia Financial Network and special consultant of Taiwan’s Central Trading and Development.

To know more about forex trading in Vietnam, read my previous post titled “Vietnam Bank allowed to Set Own Forex Rates“.

The training aimed at improving the skills of the State Bank of Vietnam officers in handling forex policy and financial management issues in the context of increased competition and global integration. Several important topics such as capital market, international commodities, exchange rates and forex transactions will be discussed at the program.

China still continues to be the leader in the list of highest foreign exchange holders, with state currency reserves exceeding $940 billion, according to a report from the Currency Board of Hong Kong.

Japan follows with a figure of $871.9 billion as of the end of July. The rest of the top ten are way behind – Russia is in third place with a forex holding of $265.6 billion, Taiwan follows with $260.4 billion, and South Korea holds the fifth spot with $225.7 billion in gold and currency reserves.

India and Singapore occupy the next two spots with $128.7 billion each, and Hong Kong, Germany and France bring up the rear. 

The dollar’s gain is South Korea’s forex loss. The Asian country’s foreign exchange reserves dropped for the first time over the past four-month period to $224.4 billion from $330 million a month ago, as a result of the dollar eating into the dollar-conversion value of non-dollar assets. South Korea’s forex reserves comprise securities and deposits in overseas currency denominations, International Monetary Fund (IMF) reserve positions, special drawing rights, and gold bullion. Hankooki Times reports:

South Korea was the world’s fifth-largest holder of foreign exchange reserves after China, Japan, Taiwan and Russia, the bank said. China had the most, $925 billion as of the end of last month, followed by Japan and Taiwan with $864.1 billion and $260.9 billion, respectively. Russia trailed with $247.3 billion, it said.

China has announced a primary dealer system for currency trade. It has aimed at reforming its foreign market. Traders say that the new system is unlikely to lead to a faster appreciation of the Chinese currency Yuan. The central bank intends to keep a firm grip on the China’s forex activities. The move may come as a setback for China’s major trading partners as they always expected a more flexible trading system with limited restrictions. The new system will formalize an existing practice of local banks handling People’s Bank of China transactions. Reuters has published an article, which is relevant to the Same Topic.

The central bank had declared in its first-quarter monetary policy report last week that it would gradually phase out its operations in the currency market.