Book Reviews | Gordon Campbell | News Flashes | Scoop Features | Scoop Video | Strange & Bizarre | Search

 


Dan Spillane: Japan Reserves on Edge of Collapse

Japan Reserves On Edge of Collapse


Dan Spillane
Citizens for Corporate Accountability
http://www.libertywhistle.us

- Japan does not have several months foreign reserve holdings left for US assets, as previously thought, because $650 billion in holdings--almost the entire amount--is already used up.

- Since Japan has run out of holdings, it is borrowing against itself using US bonds.

(SEATTLE) 02/17/04 - Figures outlined in a foreign news release concerning Japan's foreign exchange situation paint a picture that is far worse than headlines suggest. The news release, from the AFP--which apparently wasn't broadcast widely in the US news--has since been deleted from the web, but is dated 9 January 2004(1). Specifically, the release shows that Japan has already exhausted its resources to buy US dollar assets.

Japan has been buying US dollar assets to offset currency effects due to problems in the US economy, at a rate never before seen. This has been holding up US credit markets, and keeping US interest rates low, in a new and unusual way. This action is said to be unsustainable, because it represents a significant portion of Japan's total gross domestic product ("GDP").

In the release, the Japan Finance Ministry announced a "deal to sell US bonds to the Bank of Japan" to raise an amount of 100 billion dollars US. However, the release says the Finance Ministry has to buy the same back after three months. This short-term action is apparently necessary, because the release indicates almost all of Japan's foreign exchange reserves are already in foreign currencies--leaving none left to invest in US assets ("foreign currencies [already] accounted for 652.8 billion dollars"--out of 673.5 billion total.)

At the most recent rate, the additional 100 billion dollars would last a few months, at best. And there is a question as to whether the 100 billion dollars in US bonds might be unexpectedly sold. The news is significant because it suggests serious US credit problems are closer than previously thought, and the US Federal Reserve may no longer have the ability to keep US interest rates low.

## **** ##

Footnotes:

(1) "Japan's Foreign Reserves Hit Record", AFP, Friday January 9, 11:59,

http://asia.news.yahoo.com/040109/afp/ 040109035930business.html

Yahoo!: Error 404 The requested URL could not be found.

TRANSCRIPT FROM GOOGLE CACHE FOLLOWS…

Friday January 9, 11:59 AM
Japan's foreign reserves hit record after continued forex intervention

TOKYO, (AFP) - Japan's foreign exchange reserves, the world's largest, hit a record high at the end of 2003 as it continued to buy dollars to cap the rising yen and promised more funds for such intervention.

Japan's foreign exchange reserves rose 29 billion dollars to 673.5 billion dollars at the end of December for a fourth consecutive monthly record, the finance ministry said.

"The biggest reason for the gain was (currency) market intervention," said ministry official Hiroko Inaoka.

The ministry also said Friday that it is securing even more funds for intervention, saying it has struck a deal to sell US bonds to the Bank of Japan which could raise up to 10 trillion yen in cash by the end of March.

"This is to show the currency market that we are able to continue to react flexibly to deal with the situation," Ichiro Oishi, senior deputy director of the foreign exchange markets division of the ministry, told AFP.

Under the deal the finance ministry will have to buy back the US bonds from the Bank of Japan within three months of purchasing them, he said.

Japanese authorities spent 2.25 trillion yen (21.2 billion dollars) between November 27 and December 26 in an attempt to stop the yen's rise against the dollar, the ministry said Friday.

In recent trade, dealers said they suspected the authorities have been continuing to intervene in an effort to prevent a further rise in the yen and so protect the country's export-led economic recovery.

Japan's currency intervention in 2003 hit a record 20.06 trillion yen, according to the ministry.

The increase in the foreign reserves in December also reflected a five percent gain in the value of Japan's euro holdings against the dollar, ministry data showed.

Japan's foreign exchange reserves consist of securities and deposits denominated in foreign currencies, International Monetary Fund (IMF) reserve positions, IMF special drawing rights and gold.

Of the December total, foreign currencies accounted for 652.8 billion dollars, gold 10.2 billion dollars, IMF reserves 7.7 billion dollars and special drawing rights 2.8 billion dollars.

Japan remained the world's largest holder of foreign reserves for the 49th straight month, the ministry said, while China was second with 389.8 billion dollars as of the end of September.

ENDS

© Scoop Media

 
 
 
 
 
Top Scoops Headlines

 

Werewolf: Living With Rio’s Olympic Ruins

Mariana Cavalcanti Critics of the Olympic project can point a discernible pattern in the delivery of Olympics-related urban interventions: the belated but rushed inaugurations of faulty and/or unfinished infrastructures... More>>

Live Blog On Now: Open Source//Open Society Conference

The second annual Open Source Open Society Conference is a 2 day event taking place on 22-23 August 2016 at Michael Fowler Centre in Wellington… Scoop is hosting a live blog summarising the key points of this exciting conference. More>>

ALSO:

Buildup:

Gordon Campbell: On The Politicising Of The War On Drugs In Sport

It hasn’t been much fun at all to see how “war on drugs in sport” has become a proxy version of the Cold War, fixated on Russia. This weekend’s banning of the Russian long jumper Darya Klishina took that fixation to fresh extremes. More>>

ALSO:

Binoy Kampmark: Kevin Rudd’s Failed UN Secretary General Bid

Few sights are sadder in international diplomacy than seeing an aging figure desperate for honours. In a desperate effort to net them, he scurries around, cultivating, prodding, wishing to be noted. Finally, such an honour is netted, in all likelihood just to shut that overly keen individual up. More>>

Open Source / Open Society: The Scoop Foundation - An Open Model For NZ Media

Access to accurate, relevant and timely information is a crucial aspect of an open and transparent society. However, in our digital society information is in a state of flux with every aspect of its creation, delivery and consumption undergoing profound redefinition... More>>

Keeping Out The Vote: Gordon Campbell On The US Elections

I’ll focus here on just two ways that dis-enfranchisement is currently occurring in the US: (a) by the rigging of the boundary lines for voter districts and (b) by demanding elaborate photo IDs before people are allowed to cast their vote. More>>

Ramzy Baroud: Being Black Palestinian - Solidarity As A Welcome Pathology

It should come as no surprise that the loudest international solidarity that accompanied the continued spate of the killing of Black Americans comes from Palestine; that books have already been written and published by Palestinians about the plight of their Black brethren. In fact, that solidarity is mutual. More>>

ALSO:


Get More From Scoop

 
 
 
 
 
 
 
Top Scoops
Search Scoop  
 
 
Powered by Vodafone
NZ independent news