FX Reserves: 2015 A Year Of Drawdowns

FX Reserves 

2015 was the year of the FX reserve drawdown. In an attempt to protect currency pegs and fill gaps in budgets left by falling oil prices, EM central banks’ reserves declined significantly during 2015. Although, the declines appear to have stabilized on aggregate, at least for now — according to Goldman Sachs’ “Top of Mind” end of year Global Macro Research report.

The charts below illustrate the point perfectly. Key emerging markets such as China, Russia, Turkey, Brazil, Saudi Arabia and Mexico, have all seen the total value of their FX reserves, minus gold, fall from the multi-year highs reported during 2014.

(click to enlarge)

Declines stabilizing

During the fourth...