Japan's foreign exchange reserves fall for 3rd straight month in Jan.

14:46, February 07, 2011      

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Japan's foreign exchange reserves declined 0.3 percent in January as rising interest rates in Europe and the U.S. reduced the value of bonds held by the Japanese government, the Finance Ministry said Monday.

According to the ministry, the nation's reserves stood at 1.092 trillion U.S. dollars at the end of January, 3.205 billion U.S. dollars less than the previous month's reading, which marked the third consecutive month of decline.

Loans to the Japan Bank for International Cooperation (JBIC), drawn from foreign reserves, rose by 3.9 billion U.S. dollars while those to the International Monetary Fund (IMF) increased by 1.64 billion dollars, including allocations for debt-plagued Ireland, said the ministry.

Japan's foreign exchange reserves consist of securities and deposits denominated in foreign currencies, International Monetary Fund reserves, IMF special drawing rights (SDRs) and gold, and are the second largest in the world after China's.

Japan's foreign exchange reserves are being increasingly watched in 2010 for evidence of how the country is managing its vast foreign currency holdings. And the biggest fluctuations 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.

Japan stepped into the markets for the first time in six years in September, dumping the yen and boosting the dollar in order to safeguard its fragile export sector that relies on a weaker yen to make Japanese products more competitive and profitable in international markets.

Source: Xinhua
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