Japan held $555.09 billion in foreign exchange reserves at the end of August, down $1.75 billion from a month earlier for the first decline in nine months, the Finance Ministry said Friday.
The figure was the second largest on record following a record high in July, the ministry said.
The foreign exchange reserves had renewed record highs in recent months as Japanese monetary authorities had been selling the yen for the dollar and the euro in the currency markets.
The ministry, which releases monthly data on interventions, said late last month that it did not step into the foreign exchange market between July 30 and Aug. 27.
A ministry official said the decline was due to a drop in the value of U.S. bonds and the weakening of the euro against the dollar, which pushed down the value of Japan's euro-denominated assets in dollar terms.
Japan remained the largest holder of foreign reserves of any country or territory for the 44th straight month, according to the latest comparable data, the ministry said. Japan was followed by China, which had $345.9 billion in May.
The foreign exchange reserves consist of securities and deposits denominated in foreign currencies plus International Monetary Fund reserve positions, IMF special drawing rights and gold.
Japan had $443.4 billion in foreign securities in August, up from $442.15 billion in July, and $92.11 billion in foreign currency deposits, down from $95.51 billion.
Of the deposits, $5.9 billion was at foreign central banks and the Swiss-based Bank for International Settlements, $46.09 billion at Japanese banks, and $40.12 billion at foreign banks.
Japan had $9.24 billion in gold, up from $8.73 billion in July. It had $7.84 billion in IMF reserve positions and $2.5 billion in special drawing rights.