(Updating to say forex reserves at record level, adds comments from MoF official)
TOKYO (AFX) - Foreign exchange reserves increased 8.21 bln usd in April to a record 860.24 bln, rising to an all-time high for the second straight month, the Ministry of Finance said.
'The biggest contributor to the increase last month was the rise in the euro against the US dollar, which inflated the dollar value of euro-denominated assets,' an MoF official said.
The ministry said the euro had risen to 1.2633 usd at the end of April from 1.2116 usd at the end of March.
Foreign exchange reserves consist of securities and deposits denominated in foreign currencies, plus International Monetary Fund reserves, IMF special drawing rights (SDRs) and gold.
'In addition to the rise in the value of the euro, the sharp increase in the value of gold also inflated the mark-to-market price of our portfolio,' the official said.
At the end of last month, foreign currency reserves stood at 839.23 bln usd, IMF reserves at 2.185 bln, SDRs at 2.66 bln, gold at 15.84 bln and other forex assets at 0.32 bln.
Japan's forex reserves are closely watched for evidence of how the country is managing its vast foreign currency holdings, as the actions may have a significant impact on currency exchange rates and global bond markets, particularly the US government bond market.
The biggest changes in Japan's forex reserves usually occur when authorities intervene in the currency market to prevent the yen from appreciating and threatening demand abroad for Japanese exports.
Monetary authorities have not intervened since mid-March 2004.
yasuhiko.seki@xfn.com
ys/mas
© 2006 AFX News
