India is leading the charge among central banks in emerging Asian markets in rebuilding currency stocks. Since last October, the region’s countries have strengthened their foreign exchange reserves by nearly 132 billion dollars.

These countries had seen their foreign exchange reserves fall by $243 billion in the first ten months of 2022 as they sought to defend their currencies against a strong dollar.

Rebuilding their reserves could help Asian emerging markets face any potential dollar rebound driven by larger-than-expected rate hike expectations. It is an oxygen balloon for the central banks of the region, in particular the Central Bank of India (RBI), which lost nearly 100 billion dollars last year, supporting the rupee.

This week, Federal Reserve officials stressed the need for further interest rate hikes to help tame inflation but expressed divergent views on how close to stopping after new data showed signs of lingering price pressures. Several officials said on Tuesday that interest rates would need to rise more than expected to ensure inflation is contained. This is the position of Thomas Barkin, President of the Richmond Fed, or Patrick Harker, President of the Philadelphia Fed.

It is difficult to change the mind of people after 14 years of bad habits where money was cheap and flowing.