SINGAPOREMUMBAI, Oct 16 Reuters Asia39;s central banks have spent this year defending their currencies against a strong U.S. dollar, paring foreign exchange reserves to multimonth lows in the process, yet have struggled to soothe market nerves or contain capital outflows.

Emerging Asia39;s currencies have been highly volatile all year, hemmed between China39;s defence of its yuan and a surging dollar backed by a progressively more hawkish Federal Reserve.

Analysts at J.P. Morgan estimated Asian central banks, excluding China, have sold more than 30 billion of reserves in the past two months to stabilise currencies.

But that intervention has done little to calm investors worried about diminishing returns in emerging markets as dollar yields rise and currencies weaken.

Official data showed a net outflow of 2.7 billion from Asian local currency bonds in August as bond markets in Malaysia, Indonesia, South Korea, India and Thailand clocked their biggest net sales since October 2022.

Foreign exchange reserves have dwindled across the region. South Korea39;s reserves stood at 414.12 billion at Septemberend the smallest amount since October 2022, while Indonesia39;s reserves fell to 134.9 billion last month, the lowest since November.

Not all of the change can be attributed to intervention, though, as the dollar39;s rise has also eroded the value of other currencies held by central banks.

Literally everybody in Asia is now participating in the market much more, said…