— Japan Aug FX Reserves $1.2732 Trln Vs July $1.2728 Trln
— Japan Aug FX Reserves Post 2nd Straight M/M Rise

TOKYO (MNI) – Japan’s foreign reserves rose slightly to $1.2732
trillion at the end of August from $1.2728 trillion at end-July, posting
a second straight rise as higher gold prices and the appreciation of the
euro offset lower prices of U.S. Treasury notes, Ministry of Finance
data showed on Friday.

The nation’s foreign reserves hit a record high of $1.307 trillion
at the end of January.

Yields on Treasury’s 10-year notes, which move inversely to prices,
rose to 1.55% at the end of August from 1.47% at the of July, in light
of easing concerns about the debt crisis in Europe and fading
expectations for additional monetary easing in the U.S.

The euro also rose to $1.2579 at the end of August from $1.2304 at
the end of July, while the spot gold price increased to $1,700.24 per
ounce from $1,614.58 a month earlier.

Japan’s forex reserves remain the second largest in the world after
China’s, which stood at $3.240 trillion at the end of June.

At the end of last month, Japan’s foreign currency reserves stood
at $1.20 trillion, IMF reserves at $14.28 billion, SDRs at $19.65
billion, gold at $40.56 billion and other reserve assets at $486

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.

Japan spent some Y9.09 trillion on dollar-buying intervention in
the final quarter of 2011. The first action came on Oct. 31, when the
yen hit a record high of Y75.32 versus the dollar, which was followed by
more yen selling from Nov. 1 to Nov. 4.

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.

** MNI Tokyo Newsroom: 81-3-6840-4812 **

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