Japan's foreign exchange reserves grew for the second straight month to USD 1.269 trillion at the end of November, up USD 3.15 billion from the previous month, the Finance Ministry said Friday.
The foreign reserves remained the world's second-largest after China's. The increase was mainly attributed to valuation gains in Japanese government-held bonds, such as US Treasuries, according to the ministry.
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 November 30, foreign currency reserves stood at USD 1.208 trillion, IMF reserves at USD 12.83 billion, IMF special drawing rights at USD 19.10 billion and gold at USD 29.10 billion.
The country'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 75.8 billion) in the final quarter of 2011.
Japan is the only country with foreign reserves of more than USD 1 trillion besides China, whose holdings hit a record of USD 3.89 trillion at the end of September, according to the latest comparable data. Higher foreign reserves enable countries to more readily defend the value of their currencies.