The simplest measure is total reserves in dollar terms. We use total reserves in
U.S. dollars for 25 countries at the end of 1996 (see Table 3). Table 4 shows that
total reserves are not quite significant at the 10% level in the basic regression
but with the East Asia dummy included they become significant at the 5% level.
The adjusted R-squared is 0.1. The quantitative effect of higher reserves is small:
$10 billion extra reserves implies 4% less depreciation in the exchange rate from
1997 to 1998 (in addition to the effect of being in East Asia). This suggests that
only in countries with huge reserves, such as China, Taiwan, Singapore, and
Hong Kong, was there really a significant impact on the exchange rate from
holding more reserves.