Asia's Stockpiles of Dollars Pose U.S. Economic Risks | LA Times

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Asia's Stockpiles of Dollars Pose U.S. Economic Risks


A sign in Tokyo quotes 104.24 yen to the dollar last
week. The next day the greenback hit a four-year
low vs. the yen.
(AFP)

By Tyler Marshall, Times Staff Writer

HONG KONG — A massive buildup of U.S. dollars held by Japan, China and other Asian countries is fueling increasing unease among analysts and policymakers, who fear it poses risks to the fragile American economic recovery and global financial stability.

Collectively, Asian countries hold foreign exchange reserves — mostly in dollars — valued at more than $2 trillion, nearly triple that of just seven years ago, according to the Asian Development Bank. Those dollar holdings continue to grow rapidly, with the Japanese and Chinese governments particularly heavy buyers.

Asian governments buy dollars because it helps boost their export-led economies. Snapping them up keeps the greenback's value high and the value of regional currencies low, giving Asian countries a vital competitive edge in foreign markets.

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