China, Japan hold the world’s biggest foreign reserves: WEF

China came on top of the world top ten countries with the biggest foreign currency reserves estimated at $3.2 trillion, according to a report released by the World Economic Forum (WEF).

Saudi Arabia came in fourth place with $486.6 billion in foreign currency reserves, WEF reported, citing the latest data from the International Monetary Fund’s (IMF).

Top 10 countries with the highest forex reserves:

1) China - $3.2 trillion

2) Japan - $1.2 trillion

3) Switzerland - $786 billion

4) Saudi Arabia - $486.6 billion

5) Hong Kong (China) - $437.5 billion

6) India - $397.2 billion

7) South Korea - $385.3 billion

8) Brazil - $358.3 billion

9) Russia - $356.5 billion

10) Singapore - $279.8 billion

The report said that major economies like the US and Europe are absent from the list because their currencies are the most common reserve currencies used in international transactions, so such countries do not need to hold reserves.

The US Dollar and Euro are the top two reserve currencies with 63.5 percent and 20 percent global holdings, respectively, according to central banks’ reports for the third quarter of 2017.

On the other hand, the Japanese yen plays as the third reserve currency with a global holding of 4.5 percent and also holds the second highest amount of foreign currency reserves of $1.2 trillion.

Forex reserves can help a country maintain its domestic currency value at a fixed rate and reduce its value in case of flotation. They also help maintain liquidity during economic crisis, WEF said, citing The Balance.