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

The International Monetary Fund (IMF) defines reserve assets as external assets that a country’s monetary authority can use to meet the balance of payments financing needs, use to 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 sizeable war chest of foreign currency reserves is especially handy 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 percent 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 percent against the dollar in 2014, but the outcome could have been far worse had Russia had 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 2015-2018 as the political situation in Ukraine has somewhat calmed.  Further potential sanctions related to the Skripal poisoning could have a dampened effect as the " 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 ten countries with the largest foreign currency reserve assets as of March 2018. All reserve assets are given in billions of U.S. dollars. (Source:



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








Switzerland $785.7





Hong Kong






Republic of Korea






Russian Federation






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 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 the ranks of the nations with the largest foreign currency reserves, accounting for seven of the top ten. These include China, Japan, Korea, Hong Kong, and India. 

The United States had foreign currency reserves of $42.8 billion as of March 2018. The Euro Area had combined foreign currency reserves of $272.7 billion as of March  2018. The UK, which did not make the list, has $112.8 billion in foreign reserves as of March 2018. 

The Bottom Line

Maintaining foreign currency reserves is vital to the economic health of a nation. The top ten nations in terms of foreign currency reserves had combined reserve assets of $7.8 trillion as of March 2018, almost half of which was accounted for by China and Hong Kong.

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