Foreign currency reserves are vital to a nation's economic well-being. Without adequate reserves, an economy can grind to a halt, and a country may be unable to pay for critical imports, such as crude oil, or service its external debt.

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 currency exchange rates in currency exchange markets and other related purposes. Most nations hold the vast majority of their foreign currency reserves in U.S. dollars and a much smaller portion in euros.

A sizable war chest of foreign currency reserves is particularly advantageous during a currency crisis since it can be used to defend against speculative attacks on the national currency. Russia, which holds substantial foreign currency reserves, is a good example. In 2014, the United States and the European Union imposed economic sanctions on Russia for its involvement in the Ukraine conflict. Coupled with a 50% plunge in the price of crude oil (Russia's largest export and a key driver of its economy), these sanctions severely impacted the Russian economy.

The ruble slid 40% against the dollar in 2014, but the outcome could have been far worse had Russia not intervened in foreign exchange markets to prop up the ruble, expending more than $80 billion of its reserves in doing so. The ruble further strengthened throughout 2015 to 2018 as the political situation in Ukraine calmed. Further potential sanctions related to the poisoning of former Russian double agent Sergei Skripal could have had a dampening effect as "the Russian economy has adapted to the post-sanctions environment and is less dependent on foreign goods or flows than a few years ago," said Robert Simpson of Insight Investments in an email to MarketWatch.

Here are the 10 countries with the largest foreign currency reserve assets as of August 2018. All reserve assets are given in billions of U.S. dollars.



Foreign Currency Reserves (in billions of U.S. dollars)








Switzerland $804.3


Saudi Arabia









Hong Kong






South Korea





Source: IMF, 2018; *Central Bank of the Republic of China) 

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 and Hong Kong reserves are considered together, the total is $3.6 trillion. Asian nations dominate foreign currency reserves, accounting for six of the top 10. 

The United States had foreign currency reserves of $123.5 billion as of August 2018. The United Kingdom, which did not make the list, had $187.4 billion in foreign reserves as of August 2018. 

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 $8.3 trillion as of March 2018, over half of which was accounted for by China and Hong Kong.