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Japan’s foreign-exchange reserves rose to a record high $1.01 trillion at the end of February, reaching 13 figures for the first time, the Finance Ministry said Friday.

The milestone was reached as Japan debates ways of seeking higher returns from the vast pool of cash. Some have called for creating a sovereign wealth fund to manage the reserves, which are the second-largest after China.

Japan’s reserves expanded by $11.937 billion from the end of January, growing for the ninth consecutive month.

A government official attributed the growth to the rising value of euro-dominated assets, U.S. Treasury bonds and gold.

The euro rose to $1.5179 at the end of February from $1.4861 in January, pushing up the dollar value of euro-denominated assets. Meanwhile, the yield on 10-year U.S. Treasury bonds fell to 3.513 percent from 3.597 percent, raising prices.

Gold prices rose to $971.50 per troy ounce at the end of February from $923.25 in late January, raising the appraisal value of Japan’s gold holdings, the ministry said.

Japan’s reserves expanded as a result of its intervention in currency markets from January 2003 to March 2004. During that period, Tokyo spent about ¥35.3 trillion to stop the yen’s rise against the dollar. A stronger yen hurts exports by making Japanese products more expensive overseas.

Japan hasn’t intervened again since, but the value of the reserves is rising in accordance with the climbing appraisal values of its assets.

As the vast pool of money expands, lawmakers in the ruling Liberal Democratic Party are calling for the establishment of a ¥3 trillion government-controlled fund to better invest it.

The Finance Ministry said the idea is too risky.

The ministry will “try to secure liquidity and safety” while investing foreign-exchange reserves, Finance Minister Fukushiro Nukaga told reporters Friday morning.

“We pool foreign reserves for the stability of foreign-exchange movements. Based on that position, we would like to gain investment returns,” he said.

Experts who advocate establishment of a sovereign wealth fund say that since dollar-denominated assets account for a large portion of Japan’s reserves, the weakening of the U.S. currency, triggered by the subprime-mortgage crisis, will cut the value of those assets in yen terms and hurt Japan’s finances.

Information from Kyodo added

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