Central banks from 16 Asian nations may invest more of their $1 trillion of foreign reserves (FE) in the region’s debt as Federal Reserve interest-rate cuts reduce returns on US assets.
“This is something that most of us, that are not yet investing in, will be looking at,” Bangko Sentral ng Pilipinas Governor Amando Tetangco said in Jakarta.
There can be “some kind of shift” to Asian sovereign bonds, Central Bank of Sri Lanka Governor Ajith Nivard Cabraal said after a weekend meeting of policy makers from the region.
Asian countries pummelled by a financial crisis in 1997-98 have spent the past decade hoarding reserves to help protect their economies from external disturbances. A looming US recession means the world’s biggest economy may no longer be the best place for the region to invest those funds.  The US Federal Reserve has cut its benchmark interest rate by 3 percentage  points since September to help avert a recession in the world’s largest economy, amid its worst housing slump in 16 years.
Governors from the South East Asian Central Banks grouping, or SEACEN, include Indonesia, Malaysia, Singapore, Thailand, Brunei Darussalam, Vietnam, the Philippines, Cambodia, Myanmar, South Korea, Mongolia, Fiji, Nepal, Papua New Guinea, Sri Lanka, and Taiwan. They manage about $1 trillion in reserves, according to Bloomberg data.