Riyadh: ASEAN Financial Markets Remain Stable Amid Capital Flows
The Association of Southeast Asian Nations financial markets have shown resilience and stability in the face of changing capital flows, as reported by Qatar National Bank.
Robustness of Large ASEAN Economies
QNB’s latest economic commentary highlights the strength of major ASEAN economies such as Indonesia, Thailand, Malaysia, and the Philippines against sudden shifts in risk sentiment and capital flows.
External Vulnerability Assessment
QNB’s analysis focused on assessing the external vulnerability of these economies, looking at their external financing needs and the level of official foreign exchange reserves.
Crucial Role of FX Reserves
Strong foreign exchange reserves act as a vital buffer to absorb external shocks, with reserves evaluated in conjunction with short-term external financing requirements and other macroeconomic indicators.
Thailand’s Resilience
Thailand remains well-positioned to navigate capital flow changes, despite international tourism not fully recovering from the pandemic. The country’s current account surpluses have allowed it to accumulate $221 billion in official FX holdings, covering 209 percent of the IMF reserve adequacy metric.
Malaysia’s Manufacturing and Commodities Strength
Malaysia, a key producer of manufacturing goods and commodities, has displayed resilience with consistent current account surpluses. The country’s central bank holds $113 billion in FX reserves, covering 115 percent of the IMF reserve adequacy metric.
Challenges Faced by the Philippines
The Philippines, as a net external borrower with current account deficits, faces challenges due to a large trade deficit. However, the country holds $103 billion in official FX reserves, covering 196 percent of the IMF reserve adequacy metric.
Indonesia’s Return to Current Account Deficit
Indonesia, historically more vulnerable to external shocks among large ASEAN countries, has returned to a current account deficit position. The country’s official FX reserves amount to $136 billion, covering 112 percent of the IMF reserve adequacy metric.