According to Zhitong Finance APP, the overall official reserves of Asian countries have surged to nearly USD 8 trillion, providing ample &#34;war ammunition&#34; for major currency/financial authorities from Tokyo to Mumbai when they need to strengthen their efforts to defend their local currency exchange rates. This also means that the US dollar, which has performed strongly in the foreign exchange market since October, may find it difficult to replicate the crazy surge seen in recent years. After all, for the Asian sovereign currency market that has long suffered from the &#34;strong dollar storm,&#34; this time the &#34;ammunition depot&#34; of Asian countries is exceptionally strong.
According to data compiled by institutions, major central banks in the Asia region have added over USD 400 billion to their official reserve assets this year, bringing the total holdings of the 11 largest currency management authorities in Asia to nearly USD 8 trillion. The significant weakening of the dollar for most of this year and the rise in gold prices have also contributed to this growth.
&#34;Although some countries have utilized their reserves to smooth market fluctuations, the overall foreign exchange reserves of Asia-Pacific countries remain ample,&#34; said Wee Khoon Chong, a macro strategist at Bank of NY Mellon in Hong Kong. &#34;Currently, the import coverage ratio of most Asian countries is at a quite comfortable level.&#34;
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The chart above shows that Asian reserve assets have accumulated an increase of USD 400 billion by 2025, far exceeding that of 2024.
With increased volatility in global stock markets, the dollar has rebounded since September, and expectations for Asian central banks to intervene in sovereign currencies have re-entered market outlooks, leading to an overall weakening of regional exchange rates. In the past two months, both the Indian rupee and the Philippine peso have hit historical lows, while the Korean won has hovered near its weakest level in nearly 16 years.
The largest contributor to the accumulation of official reserve assets this year is China, which has increased its total reserves by approximately USD 141 billion, while Japan has added USD 116 billion. The sustained weakening of the dollar in the first nine months of the year has enhanced the valuation of its non-dollar assets, and the significant rise in gold prices has further boosted the overall reserve value.
It is noteworthy that when gold prices rise, the &#34;monetary gold&#34; held by central banks is valued at market price, which will significantly increase the dollar amount of the entire &#34;official reserve assets.&#34; Financial news often refers to &#34;foreign-exchange reserves&#34; to denote &#34;the entire international reserve pool (including gold),&#34; and in emergencies, some currency management authorities may boost their sovereign currency by significantly selling gold.
In official statistical terms, gold itself is a component of &#34;official reserve assets,&#34; so an increase in gold prices will raise the market value of monetary gold, thereby inflating the dollar scale of what they refer to as &#34;foreign exchange reserves (which is actually official asset reserves).&#34; The total value of Asia's official reserve assets is close to USD 8 trillion, with part of the increase being paper gains from gold revaluation. According to definitions from authoritative institutions such as the IMF and BIS, official reserve assets typically include four major categories: foreign currency assets (foreign exchange assets: foreign currency cash, foreign currency government bonds, etc.);
Monetary gold; Special Drawing Rights (SDRs); reserve position in the IMF.
Since the beginning of this year, the Indian rupee exchange rate (against the US dollar) has fallen by more than 3%, affected by the United States imposing tariffs of up to 50% on the country's export goods and significant capital outflows from the local stock market. To prevent the exchange rate from falling below the historical low of 88.80 per dollar set in late September, the Reserve Bank of India has maintained active monetary intervention actions in both onshore and offshore currency markets in recent weeks.
The Korean won has depreciated by 3.2% in the past month, prompting South Korean central bank officials to state that they will cooperate with major foreign exchange market participants in South Korea, including the state-owned National Pension Service, to defend the sovereign currency. As Japan's new Prime Minister Sanae Takaichi, who advocates &#34;Abenomics,&#34; may adopt large-scale stimulus measures, the yen has weakened against the dollar to its lowest point in 10 months. Japanese Finance Minister Shunichi Suzuki has intensified warnings about the accelerated depreciation of the yen, emphasizing that the Japanese government may intervene in the foreign exchange market at any time.
Although efforts to curb currency depreciation may be seen as necessary actions, these measures also carry the potential risk of controversy and conflict with U.S. President Donald Trump, who views foreign exchange market intervention as part of the rationale for the U.S. government to impose higher tariffs. Some central banks in Asia have even recently reached agreements with the U.S. Treasury to avoid gaining unfair competitive advantages through foreign exchange intervention or intervention in the international monetary system.
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The above chart shows statistics from Bank of NY Mellon, indicating that Asia remains in a relatively comfortable position regarding official reserve adequacy.
&#34;There are some signs that major central banks or finance departments in Asia are increasingly concerned about the weakening of their sovereign currencies,&#34; said Michael Wan, a senior currency strategist at MUFG in Singapore. &#34;Reserve assets, including foreign exchange and gold, should still serve as a moderate first line of defense against exchange rate fluctuations, but Asian central banks will also pay close attention to the U.S. Treasury's views on currency manipulation and how this will affect the evolution of future trade agreements with the U.S. government.&#34;
In the latest semi-annual currency policy assessment released by the U.S. Treasury in June this year, it refused to designate any country as a &#34;currency manipulator,&#34; but specifically criticized some Asian countries for their &#34;lack of exchange rate transparency.&#34; Asian trading partners, including Japan, South Korea, Singapore, and Vietnam, have been placed on the U.S. Treasury's list of &#34;priority monitoring&#34; countries, and their exchange rate behaviors will be closely monitored over the long term.
In addition to the continuously rising official asset reserves such as foreign exchange, monetary authorities have other tools at their disposal. These tools include verbal warnings frequently used by the Japanese Ministry of Finance or encouraging companies to repatriate overseas market earnings, such as Malaysia's measures to defend its currency exchange rate

The official reserves of Asian countries are close to USD 8 trillion, providing ample "war ammunition" to defend their currency exchange rates. Since the beginning of this year, major central banks in Asia have increased their reserves by over USD 400 billion, mainly driven by the depreciation of the dollar and rising gold prices. Although some countries have used their reserves to smooth market fluctuations, overall foreign exchange reserves remain abundant. The dollar has recently rebounded, but Asian central banks may intervene to stabilize exchange rates. China and Japan are the main contributors to the increase in reserves

Asia's official reserves are approaching USD 8 trillion! The strong dollar may face a well-armed currency defense battle