NEWS ALERT February 24, 2022, 2:48 p.m. EST: The Russian central bank began selling foreign currency on the forex market for the first time since 2014 after Russia’s invasion of Ukraine sent the ruble to all-time lows.
Foreign currency reserves are vital to a nation’s economic well-being. Without adequate reserves, a country may be unable to pay for critical imports, such as crude oil, or service its external debt. Inadequate reserves can also limit a central bank’s available responses in the event of an economic crisis.
Foreign currency reserves can also be used to control exchange rates, which in turn affects global trade. If a currency, whether fixed or floating, begins to deviate from its desired rate with a foreign currency, the central bank can buy and sell reserves as needed to restore the intended exchange rate.
Foreign currencies are not the only form of asset at a government’s disposal. The International Monetary Fund (IMF) defines foreign reserves as external assets that a country’s monetary authority can use to meet the balance of payments financing needs, affect exchange rates in currency exchange markets, and other related purposes. These assets can include gold, special drawing rights (SDRs), and reserve positions in the IMF. However, foreign currency is the most abundant asset in most foreign reserves, and most nations hold the vast majority of their foreign currency reserves in U.S. dollars, followed by euros and the Japanese yen.
Here are the 10 countries with the largest foreign currency reserve assets. All figures are as of December 2021 unless otherwise noted.
Foreign Currency Reserves (in billions of U.S. dollars)
$3,222.4 (November 2021)
$1,259.9 (January 2022)
$548.9 (January 2022)*
Sources: IMF and *Central Bank of the Republic of China (Taiwan)
The above table lists China’s and Hong Kong’s reserves separately. China has by far the largest foreign currency reserves with over two and a half times more than the second-largest reserve holder, Japan. When China’s and Hong Kong’s reserves are considered together, the total is $3.7 trillion. Asian nations dominate foreign currency reserves, accounting for 8 of the top 10.
United States foreign currency reserves, which are mostly euros and yen, were valued at $252.2 billion in February 2022. The United Kingdom, which did not make the list, held $135.4 billion in foreign reserves as of January 2022.
The Bottom Line
Maintaining foreign currency reserves is vital to the economic health of a nation. The top 10 nations in terms of foreign currency reserves had combined reserve assets of $8.8 trillion as of December 2021, more than 40% of which was accounted for by China and Hong Kong.