Japan Nov foreign exchange reserves rise 2.21 bln usd to record 840.09 bln usd
Tuesday, December 7, 2004 12:21:17 AM
afxpress.com
TOKYO (AFX) - Japan's foreign exchange reserves in November rose 2.21 bln usd to 840.09 bln, the 14th rise in the past 15 months, the Ministry of Finance said
November was the fourth consecutive month the figure posted a global record high, swollen by technical factors rather than by currency market intervention
As of Nov 30, Japan held foreign currency reserves of 819.1 bln usd, IMF reserves of 6.98 bln usd, IMF special drawing rights (SDRs) of 2.81 bln usd and gold worth 11.16 bln usd. Those sums compare with end-October figures for foreign currency reserves of 817.675 bln usd, IMF reserves of 7.034 bln usd, IMF special drawing rights (SDRs) of 2.704 bln usd and gold holdings of 10.470 bln usd
Japan's forex reserves are closely watched for evidence of how Japan is managing its vast foreign currency holdings, as the actions have a powerful impact on currency exchange rates and global bond markets, particularly the US debt market
How Japan invests its forex reserves is watched closely for signs of whether US interest rates may rise or fall due to the willingness of foreigners to keep funding the huge US budget deficit by buying government bonds
Borrowing by the US from abroad has soared this year to 620 bln usd, a record 5.7 pct of GDP. Japan held a staggering 720 bln usd of US government bonds as of Oct 31, a figure that soared due to massive currency market intervention through March
Japan spent a record 14.83 trln yen intervening in the forex market during the January-March quarter, after spending a massive 20.06 trln yen intervening during calendar 2003
That greatly inflated Japan's foreign currency reserves, which are mainly invested in US Treasuries as the only market large enough to absorb so much money, helping to keep US interest rates low despite the soaring US trade and government deficits
On Nov 30, however, the MoF reported that Japan did not intervene at all in currency trading that month, the eighth consecutive month that Japan had not intervened
But currency traders suspect Japan may resume intervening soon in an effort to arrest the dollar's decline against the yen
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