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Foreign exchange reserve accumulation in the ASEAN-4 : challenges, opportunities, and policy options

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  • Donghyun Park

    (Asian Development Bank)

  • Gemma Esther B. Estrada

    (Asian Development Bank)

Abstract

The ASEAN-4 countries—Indonesia, Malaysia, Philippines, and Thailand—have large and growing stocks of foreign exchange reserves. The region’s reserves now comfortably exceed levels required for traditional liquidity purposes. This has led to calls for a more active management of reserves, which would yield higher risk-adjusted returns. In this paper, we examine the various opportunities and challenges associated with more active, profit-oriented management of reserves in the ASEAN-4. We also draw on the experiences of well-established sovereign wealth funds to suggest directions for policymakers in their quest for higher returns, which will contribute to national welfare by augmenting fiscal resources.

Suggested Citation

  • Donghyun Park & Gemma Esther B. Estrada, 2010. "Foreign exchange reserve accumulation in the ASEAN-4 : challenges, opportunities, and policy options," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 47(1), pages 89-108, June.
    • Handle: RePEc:phs:prejrn:v:47:y:2010:i:1:p:89-108
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    Keywords

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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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