Japan Feb forex reserves fall 402 mln usd to 840.56 bln
Japan say no currency intervention since March 2004
Monday, March 7, 2005 1:43:13 AM
forexstreet.com
TOKYO (AFX) - Japan's foreign exchange reserves fell 402 mln usd in February to 840.56 bln usd, the second straight month of decline, the Ministry of Finance (MoF) said
Japan's foreign reserves remained the highest in the world for the 63rd straight month. China has the world's second-largest forex reserves, with 609.9 bln usd as of the end of 2004
Because Japan's foreign currency reserves are the world's largest, Japan is being watched closely to see whether Tokyo starts paring its holdings of US-dollar denominated assets to reduce losses if the dollar resumes its slide against foreign currencies in response to soaring US twin deficits
The Japanese are major players in the US Treasuries market, and their investment behavior is watched closely for signs of whether foreign investors remain willing to finance the growing US fiscal and current account deficits by buying US government bonds
Many analysts have warned any sign of a prolonged decline in Japanese buying of US Treasuries would also certainly cause the dollar to tumble in value against the yen and other major currencies, and US interest rates to rise, possibly imperilling economic growth in the US and internationally. Mindful of the consequences, top Japanese government officials have repeatedly declared in recent weeks that Tokyo has no intention of cutting its exposure to US-dollar denominated assets. Last Thursday the finance ministry released data showing Japanese investors turned net buyers of foreign bonds over the last week of February for the first time in three weeks
Japanese investors bought a net 312.1 bln yen of foreign bonds in the week to February 26, the data showed. Japanese had been net sellers the previous two weeks, reducing their holdings during that period by 1.07 trln yen. Foreign exchange reserves consist of securities and deposits denominated in foreign currencies plus International Monetary Fund (IMF) reserves, IMF special drawing rights and gold
At the end of February, Japan's foreign currency reserves stood at 820.48 bln usd, down just slightly from 821.20 bln usd at end-January. Japan's IMF reserves stood at 6.52 bln usd, down from 6.63 bln yen at the end of January, SDRs at 2.81 bln usd, up from 2.75 bln usd, and gold at 10.71 bln usd, up from 10.39 bln usd. Japan accumulated the world's largest forex reserves by intervening heavily in the currency market at various times to prevent the yen from appreciating and undermining Japan's export competitiveness. But Japan has not intervened in currency trading for nearly a year now
The finance ministry announced on February 28 that Japan had not intervened at all during the period January 28 to February 24, meaning it has not intervened since mid-March last year. |
