Japan's Foreign Reserves Hit Record High

Second in the world behind China.

Japan's foreign exchange reserves rose to an all-time high of $905.05 billion at the end of February, up $9.67 billion from January, the finance ministry said March 7.

The latest figure topped the previous record of $896.95 billion set in November last year.

Tokyo's forex reserves remain the second largest in the world, next to China whose holdings reached $1.07 trillion at the end of 2006, according to China's central bank.

A finance ministry official attributed the rise in Japan's foreign reserves to rising U.S. bond valuations and profits from other securities. Japan's large foreign exchange reserves are the result of years of currency intervention by the government to keep the yen down against the dollar and help exporters stay competitive. However, Japan's monetary authorities have not intervened since mid-March 2004, allowing the yen to find its own level against the dollar.

Foreign exchange reserves consist of securities and deposits denominated in foreign currencies, plus International Monetary Fund reserves, IMF special drawing rights (SDRs) and gold.

Copyright Agence France-Presse, 2007

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