Japan’s continued dollar-buying intervention pushed its foreign-exchange reserves to a record $776.86 billion as of the end of February.
The Finance Ministry said Friday that the reserves, by far the largest in the world, grew $35.61 billion from a month earlier for the sixth consecutive month of increase.
The higher reserves were mainly due to the country’s controversial currency-market intervention.
Japan spent 3.34 trillion yen in February to stem the yen’s rise and prop up the dollar, even though the U.S. currency steeply bounced back from the 105 yen level in early February to above 109.00 yen at the end of the month.
February’s figure brought the total amount of Japan’s intervention since the beginning of the year to 10.49 trillion yen. Japan carried out an unprecedented 20.43 trillion yen worth of interventions in 2003, the largest for a single year.
Japanese authorities have said the yen’s sharp rise could hamper the country’s export-led economic recovery.
But Japan’s actions have drawn warnings from overseas.
“The current performance of the Japanese economy suggests that we are getting closer to the point where continued intervention at the present scale will no longer meet the monetary policy needs of Japan,” U.S. Federal Reserve Board Chairman Alan Greenspan said in a speech earlier this week in New York.
“As the present deflationary situation abates, the monetary consequences of continued intervention could become problematic,” he said.
According to the most recent statistics by the International Monetary Fund, Japan’s $664.5 billion in foreign reserves as of December was the world’s largest since October 1999, followed by China, with $426.4 billion as of November.