Japan eyes private sector to manage part of its $1.27 tln forex reserves

Reuters

TOKYO, Oct 13 (Reuters) - Japan is looking to allow privatesector funds and trust banks to manage a part of its$1.27-trillion pool of foreign exchange reserves in a drive tomanage them better, a government source told Reuters on Sunday.

Until now the government has managed the foreign exchangereserves by itself, but its ability to do so has been stretchedas the reserve roughly doubled over the past decade, thanks tomassive yen-selling interventions to weaken Japan's currency.

The government needs to clear legal hurdles on its use offoreign exchange assets if it wants to draft in the services ofprivate financial institutions and will propose amending the lawduring a parliamentary session that begins on Tuesday.

Current regulations limit the government to lending itsforeign securities only to banks, but the new law will alsopermit brokerages to borrow securities, the source said, and thefees borrowers pay will help replenish government coffers.

The government will not alter its stance of investing thebulk of its foreign exchange reserves in U.S. Treasuries andother high-grade investment bonds, and it will allow privatesector institutions to manage only a few percent of thereserves, the Nikkei business daily reported on Sunday.

Japan is the world's second largest holder of foreigncurrency reserves after China, which held about $3 trillion byAugust, according to IMF data.

View Comments (2)