INSUBCONTINENT EXCLUSIVE:
billion average over 2014-2019, Fitch said further.Fitch Ratings says the reserve dynamic among APAC (Asia-Pacific) sovereigns appears to be
diverging, with potential implications for their credit profiles.The New York-based agency added that some central banks have been able to
accumulate reserves on current account improvements or investment inflows, while others still see their currencies under pressure from US
Fed tightening prospects.Official reserves among Fitch-rated sovereigns in APAC increased by almost USD 170 billion in the first half of
2023, mostly driven by growth among those with already large reserve buffers, including China (A+/Stable), Singapore (AAA/Stable), India
(BBB-/Stable), Japan (A/Stable) and Taiwan (AA/Stable)
near-term influence on ratings.Several sovereigns in ASEAN, including Indonesia (BBB/Stable), Malaysia (BBB+/Stable), the Philippines
(BBB/Stable) and Thailand (BBB+/Stable), saw reserves decline over 2Q23, which may in some cases reflect intervention to support currencies
The changes have been marginal so far, not influencing credit profiles significantly, but currency pressure may continue until the Fed
finishes raising rates.Reserve dynamics may have a greater impact for frontier market sovereigns, especially where reserve coverage ratios
are low and external liquidity positions fragile
In our most recent rating assessments, we stated that external finance factors, potentially including marked or sustained declines in
foreign exchange reserves, could be a driver of negative rating action in sovereigns such as Bangladesh (BB-/Stable), the Maldives
(B-/Negative), Mongolia (B/Stable) and Vietnam (BB/Positive).Official reserves have fallen by around 29% in the Maldives over January-July
2023, reversing the improvement in reserves in late 2022 following the conclusion of a USD 200 million bilateral currency swap with India
Bangladesh improved reserve transparency with the adoption of IMF definitions in June
IMF data show its reserves declined 31% over January-July, but we estimate the decline could be around 16% if the new definitions applied
throughout the period.By contrast, reserves in Mongolia and Vietnam climbed over the first half of 2023
Official reserves rose by 3% in Vietnam over January-May 2023 (most recent available data), after falling 21% in 2022
The modest increase partly reflects a widening of the goods trade surplus in the first half of 2023, as weaker domestic demand has curbed
remain below the historic peak of USD 4.9 billion seen in the second quarter of 2021, but have risen significantly from their recent low of
USD 2.7 billion in August 2022
exchange and tender offer in January 2023
nine-month Stand-by Arrangement with the IMF
policy around the parliamentary elections
However, the political climate remains volatile and we view risks to IMF programme implementation and external funding as high amid
