India has posted the biggest gain in hard currency reserves of any major emerging economy in the past year, bucking the weaker trend in fellow BRICS states Russia, Brazil and South Africa.
Indian reserves stood at $343 billion at the end of March 2015, up more than $20 billion from end-2014 levels and a jump of almost $40 billion from a year ago, this graphic shows:
Reforms after a pro-business government took office last May triggered huge foreign inflows into Indian markets, which the central bank used in order to rebuild reserves.
But Russia's reserves fell $130 billion or 27 per cent from last March after authorities spent billions defending the rouble amid last year's oil crash and the conflict in Ukraine. Reserves are $30 billion below end-2014 levels.
Some of this, however, is down to valuations - the euro, comprising 40 per cent of Russian reserves is down 23 per cent in the past year against the dollar.
"Capital inflows into emerging markets have slowed compared to pre-crisis years, hence a slowdown in reserve accumulation," said Manik Narain, a strategist at UBS, referring to investors' wariness over slower growth and worsening politics in the developing world.
Across emerging markets excluding China, reserves were $4.89 trillion at the end of March compared to $4.94 trillion a year ago, according to this graphic based on data from CrossBorder Capital:
"It's a divergent trend, some places such as Korea and India are seeing a lot of stability, while in Russsia it is the opposite. Others such as Indonesia and Turkey are being forced to tolerate currency depreciation because there is a trade-off between depleting your reserves and letting the currency weaken," Narain added.
In Brazil, the central bank has stopped intervening via swaps, which it supplied to investors as protection against currency losses.
While reserves stand only $6 billion below year-ago levels, an official source said the bank had already sold swaps equivalent to 40 per cent of reserves.
"This is the key reason why they are stopping the swaps, as it could be a significant drain on reserves if it continues," Per Hammarlund, head of EM strategy at SEB, said.
Ukraine's reserves, which plunged 63 per cent last year and could only have funded five weeks of imports by early March, rose to $10 billion after the disbursement of an IMF loan tranche.
