(MENAFN - Kuwait News Agency (KUNA)) Japan's foreign exchange reserves fell for the first time in four months to USD 1.274 trillion at the end of October, down USD 2.84 billion from the previous month, the Finance Ministry said Wednesday.
The foreign reserves remained the world's second-largest after China's.
The drop in foreign exchange reserves was mainly due to the declining market value of its US government bond holdings and gold prices, the ministry said. Increased loans to the government-affiliated Japan Bank for International Cooperation also helped deflate Japan's reserves.
Japan's foreign exchange reserves consist of securities and deposits denominated in foreign currencies plus the International Monetary Fund (IMF) reserve positions, IMF special drawing rights and gold.
As of October 31, foreign currency reserves stood at USD 1.196 trillion, IMF reserves at USD 14.57 billion, IMF special drawing rights at USD 19.95 billion and gold at USD 42.29 billion.
Japan's reserves are closely monitored for evidence of how authorities are managing vast foreign currency holdings, as the actions have significant impact on currency exchange rates and global bond markets, particularly in the US government bond market.
The authorities did not intervene in currency markets to stem the yen's rise after spending JPY 9.09 trillion (USD 113 billion) in the final quarter of 2011, including the biggest ever single-day intervention at around JPY 7.5 trillion (USD 94 billion) on October 31, when the Japanese currency hit a postwar high of JPY 75.32 against dollar.
Japan is the only country with foreign reserves of more than USD 1 trillion besides China, whose holdings hit a record of USD 3.240 trillion at the end of June, according to the latest comparable data.