High levels of foreign-exchange reserves can not fully insure against a sudden stop of capital inflows, said Takatoshi Kato, a deputy managing director of the International Monetary Fund.

Kato said that high levels of reserves were not able to shield Asian economies from the economic and financial strains of the global crisis. He said that Asian countries were able to draw on these cushions to ease their dollar shortages and slow down currency depreciation but he also warned that further declines