FOREIGN EXCHANGE RESERVE ADEQUACY IN BRICS ECONOMIES: A MULTI-INDICATOR COMPARATIVE ANALYSIS (1997–2023)

Abstract

The adoption Foreign exchange reserves constitute a crucial buffer for emerging economies facing volatile capital flows, trade shocks, and external financial disturbances. This study provides a comparative assessment of foreign exchange reserve trends and adequacy in BRICS economies, Brazil, Russia, India, China, and South Africa, over the period 1997–2023. Using a multi-indicator framework, reserve adequacy is evaluated through macroeconomic, trade-based, solvency, and liquidity indicators, including reserves-to-GDP ratio, import cover, reserves as a percentage of total external debt, and short-term external debt relative to reserves. The results reveal a sustained accumulation of foreign exchange reserves across all BRICS economies since the early 2000s, reflecting an increasing emphasis on precautionary reserve management. China consistently exhibits the strongest reserve adequacy across all indicators, while India shows a stable and significant improvement following post-liberalisation reforms. Russia and Brazil occupy an intermediate position, characterised by adequate but relatively volatile reserve buffers, whereas South Africa continues to display comparatively weaker reserve adequacy despite gradual improvement. Countries with stronger import and short-term debt coverage demonstrate greater resilience during periods of global financial stress, including the Global Financial Crisis and the COVID-19 pandemic. The study highlights the importance of employing multiple indicators to assess reserve adequacy and offers policy-relevant insights for strengthening external sector resilience in emerging economies.

Keywords

foreign exchange reserves, reserve adequacy, BRICS economies, external vulnerability, and emerging markets.

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To cite this article

Eljo Joseph, T., & Thushara George. (2025). Foreign Exchange Reserve Adequacy in BRICS Economies: A Multi-Indicator Comparative Analysis (1997–2023). John Foundation Journal of EduSpark, 7(4), 95-111.