International Reserves Accumulation
in Emerging Countries with Flexible Exchange Rates
Patricia Rodríguez and Omar Ruiz

Figure 5 shows the result of the average ratio of international reserves to quarterly imports, using Triffin's methodology. The first result is that the average ratio of reserves to imports between 1995-2009 is by a factor of three to four, in other words, international reserves cover three to four times the value of imported goods and services for each of these countries. Since 2008, this ratio has noticeably increased: in each of the countries the ratio has increased by between two and three percentage points. Brazil is the most extreme case. In the second quarter of 2009 its [international reserves] reached the equivalent of 6.87 months of its imports. This is explained both by the reduction in international trade and by its increasingly large volume of international reserves.

Figure 5. International reserves / import ratio (selected countries). 1995-2009
International reserves, excl. gold
(Months of imports)
Source: Compiled by authors using data from INEGI, INDEC, INE and IBGE and the central
banks of Argentina, Brazil, Chile and Mexico.

In terms of the IR to short-term debt ratio, shown in Figure 6, Argentina, Chile and Brazil maintained the quotient stable during most of the period; Mexico is the exception, for it has increased its level of IR since 2005. This implies that the short-term debt has reduced in relative terms in each country, since as a counterpart they have set about shoring up their international finances with real increases in their international reserves.

Figure 6. Monetary reserves / short-term debt ratio of four Latin American countries. 1995-2008
(US$ billion)
Source: Compiled by authors using data from global development indicators, World Bank (2010).