Japan May Forex Reserves Hit Fresh Record On Higher Income
— Japan May FX Reserves Record $1.140 Trln Vs Apr $1.136 Trln
— Japan May Forex Reserves Post 3rd M/M Rise In Row
— Japan MOF: May FX Reserves Up On Higher Foreign Bond Prices
— Japan MOF: May Reserves Up Also on Higher Interest, Dividend Income
TOKYO (MNI) – Japan’s foreign reserves rose to a fresh record high
of $1.140 trillion at the end of May, Ministry of Finance data released
Foreign reserves posted a third straight month-on-month rise in
May, up from the previous high of $1.136 trillion hit at end-April.
Higher foreign bond prices as well as interest and dividend gains
from overseas asset holdings pushed up May foreign reserves.
The euro stood at $1.4414 in Tokyo at the end of May, down from
$1.4836 at end-April, but the price of benchmark 10-year U.S. Treasury
bonds rose as the yield fell further to 3.063% at end-May from 3.290% a
month earlier, according to the MOF.
Japan’s forex reserves remain the second largest in the world
beyond to China’s, which are estimated at $3.04 trillion at the end of
Foreign exchange reserves consist of securities and deposits
denominated in foreign currencies, International Monetary Fund reserves,
IMF special drawing rights (SDRs) and gold.
At the end of last month, Japan’s foreign currency reserves stood
at $1.062 trillion, IMF reserves at $18.47 billion, SDRs at $20.55
billion, gold at $37.80 billion and other reserve assets at $456
Japan’s forex reserves 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 MOF
to prevent a steep appreciation or depreciation of the yen.
Japanese authorities intervened in the foreign exchange markets to
the tune of Y692.5 billion in March.
The yen-selling intervention was part of a coordinated move by the
Group of Seven industrialized nations to aid Japan in the wake of the
March 11 earthquake disaster.
The intervention was the first concerted G-7 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 U.S. 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.
** Market News International Tokyo Newsroom: 81-3-5403-4835 **