As countries hit by the Asian financial crisis lacked sufficient foreign reserves to defend their currencies, sharp currency depreciation prompted foreign creditors to cease funding, leading to a further spiral of depreciation and foreign-exchange debt defaults. But China's huge reserves, which were equivalent to 562 per cent of its short-term foreign-exchange debt at the end of last year, should provide liquidity support in the event of repayment difficulties caused by foreign-currency liquidity strains, BNP Paribas says in its latest research report. The bank sees borrowers whose financial positions are already stretched as the most vulnerable to another round of yuan depreciation.