— Japan Mar FX Reserves $1.289 Trln Vs Feb Record $1.303 Trln

TOKYO (MNI) – Japan’s foreign reserves fell to $1.289 trillion at
the end of March from $1.303 trillion at end-February, posting the
second straight monthly drop on lower prices of U.S. Treasuries and god,
Ministry of Finance data showed on Friday.

This followed a decrease in February from a record high of $1.307
trillion marked at the end of January.

The MOF said Japan did not intervene in the forex market between
February and March after having spent Y9.09 trillion on selling yen for
the U.S. currency in the final quarter of 2011.

Japan intervened in the foreign exchange market on Oct. 31, when
the yen hit a fresh life-time high of Y75.32 versus the dollar, and
conducted further yen-selling operations from Nov. 1 to Nov. 4.

Japan’s forex reserves remain the second largest in the world after
China’s, which stood at $3.18 trillion at the end of December.

At the end of last month, Japan’s foreign currency reserves stood
at $1.21 trillion, IMF reserves at $16.92 billion, SDRs at $19.93
billion, gold at $40.90 billion and other reserve assets at $474
million.

Japan’s forex reserve data are closely watched for evidence of how
the country is managing its vast foreign currency holdings.

The biggest changes in Japan’s forex reserves usually occur when
the Bank of Japan intervenes in the currency market on behalf of the
Ministry of Finance to prevent a steep appreciation or depreciation of
the yen exchange rate.

Last year Tokyo also conducted currency market intervention in
August and March, with the latter operation forming part of a
coordinated move by the Group of Seven industrialized nations to aid
Japan in the wake of the March 11 earthquake disaster.

That intervention was the first concerted G7 forex action since
September 2000, when the euro came under heavy selling pressure as
capital flowed into the U.S. stock market at the peak of the IT bubble.

In September 2010, the reserves were pushed up by the Japanese
government’s large-scale forex intervention to sell yen for the U.S.
currency — the first government intervention in over six years — in a
bid to prevent the yen’s rapid rise from hurting exporter profits and
thus a sustained economic recovery.

Before the large-scale intervention to sell a total of Y2.125
trillion for the dollar on Sept. 15, 2010, Japan had stayed out of the
forex market since mid-March 2004, when it ended its massive
15-month-long yen-selling operation.

tokyo@marketnews.com
** MNI Tokyo Newsroom: 81-3-5403-4835 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$,M$$FX$]