Barclays: If the US dollar continues to strengthen, Asian foreign exchange reserves could decrease by 670 billion US dollars.

Barclays Bank said that if the US dollar strengthens to a high in September 2022 and oil prices continue to rise, Asian foreign exchange reserves may decrease by $670 billion. Analysts Mitul Kotecha and Audrey Ong wrote in a research report that the most affected currencies would be the Indian Rupee, Indonesian Rupiah, Philippine Peso, and Malaysian Ringgit. The region's foreign exchange reserves are relatively sufficient and have not yet returned to the past practice of heavy intervention in the foreign exchange market. If the US dollar continues to rise significantly, the situation may change; every 1% increase in the US dollar would lead to a 0.63% decrease in Asian foreign exchange reserves. Given the above risks, it is not surprising that Asian central banks are trying to limit the consumption of foreign reserves, although they have not taken aggressive measures. In addition to forward contracts/NDF, some central banks are also using other means to defend their currencies, including regulatory measures. "Unless the Strait of Hormuz opens completely soon and oil prices fall, Asian currencies are unlikely to have a respite in the short term, both of which currently seem distant."