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Currency Reserves Come into Focus

Foreign exchange traders 'smell blood' as some emerging-market governments burn through foreign reserves in an effort to prop up their currencies.

By Ye Xie and John Detrixhe, Bloomberg | Updated on February 12, 2014

Foreign-exchange reserves are emerging as the latest battleground between traders and developing nations trying to stem the worst rout in their currencies since 2008.

Nations with the smallest reserves to fend off currency speculators will continue to see their exchange rates under pressure, options prices show. Of the 31 major currencies tracked by Bloomberg, traders are most bearish on Argentina’s peso, Turkey’s lira, Hungary’s forint, Indonesia’s rupiah, and South Africa’s rand, while the forwards market signals that Ukraine’s hryvnia will fall 20 percent in a year.

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