BoJ Reserves Rise to Record $996 B

123jump.com Staff
07 Feb, 2008
New York City

Foreign exchange reserves of Japan reached to a new high after adding $22.7 billion in January to $996.04 billion. The Bank of Japan holds several currencies in the reserves but its exact breakdown is not known. The BoJ holds less the 3% of its reserve in gold. As the pressure on dollar mounts the BoJ and other central banks may lower its exposure to dollar and increase its euro and other currencies holdings.

[R]5:00AM New York, 7:00 PM Tokyo- Japan’s foreign exchange reserves rose $22.68 billion $996.04 billion in January.[/R]

Stocks rose in Japan after the country’s foreign exchange reserve assets climbed for the seventh straight month to a record level on the rising trade surplus. The Bank of Japan holds less than 3% of its assets in gold.

The Bank of Japan’s Deputy Governor’s view Kazumasa Iwata that consumer spending remains stronger than consumer confidence also helped positively influence investor sentiment.

Market sentiment

In Tokyo trading Nikkei 225 index shares rose 0.82% or 107.91 to 13,207.15 and the broader Topix Index jumped 0.5% or 6.67 to 1,305.08.

In the first section of the Tokyo Stock Exchange 10.8 billion shares worth 1.2 trillion yen changed hands and in the second section 256 shares valued at 3.39 billion yen were traded.

Of the Nikkei 225 stocks 120 rose, 94 declined, and 11 were unchanged.

Nichirei Corp led advancers with a rise of 7.63% followed by gains in Konami Corp. of 7.28%.

Foreign Reserve Rises

The Ministry of Finance reported today that the country’s foreign reserve assets climbed by $22.68 billion at the end of December to $996.04 billion in January.

Of the reserve assets, $844.4 billion are in securities while $124 billion in deposits. The IMF reserve position holds $1.4 billion, $3 billion are in SDRs, gold accounts for $22.7 billion, and other reserve assets are at $376 million.

Discomfort over BHP, Rio Deal

Kyodo news reported yesterday that secretary general of Japan’s Fair Trade Commission Shoji Ito said the country will discuss with other countries, including Australia and Britain, on whether the takeover bid of Rio Tinto by BHP Billiton presents antitrust complications.

Japan Iron and Steel Federation has already registered its reservations on the deal as the merger of the two mining companies will lead to the country relying on one company for 60% of its iron ore products.

Consumer spending

Bloomberg news reported that Deputy Governor of the Bank of Japan Kazumasa Iwata said today in a speech in western Japan that consumer spending remains firmer than consumer confidence.

Separately, the online edition reported that the Bank of Japan Governor Toshihiko Fukui told parliament today that rising oil prices were posing significant inflationary pressures on the economy at the same time dampening growth.

Property acquisitions drops

The Nikkei online edition reported today that the obtaining tight credit conditions and soaring prices of properties slowed property purchases by real estate investment trust by 32% in value last year.

The yen climbed 0.27% from 106.55 to 106.54.

Gainers and Losers

Nichirei Corp. led gainers of the Nikkei 225 index shares with a rise of 7.63% followed by rises in Konami Corp. of 7.28%, in Softbank Corp. of 6.23%, in Nisshin Industries of 5.94%, and in KDDI Corp. of 5.15%.

Shipping lines also rose after brokerage Merrill Lynch & Co. raised the rating on the industry on expectations of high profitability from rising freight charges. Nippon Yusen rose 4.80%, Kawasaki Kisen advanced 2.06% and Mitsui O.S.K. Lines increased 1.62%.

Taiyo Yuden led decliners of the Nikkei 225 index shares with a fall of 7.17% followed by losses in Nippon Suisan of 4.30% in Sumco Corp 4.07%, in Komatsu Limited of 3.94%, and in Mazda Motor Corp. of 3.87%.

Taiyo Yuden fell after cutting its full-year profit target and on a downgrade on the stock by Goldman Sachs from “buy” to “neutral”.

Earnings News

Mazda Motor Corp. reported today that net sales for the nine months ending December 31st rose 9.5% to 2.5 trillion yen from 2.2 trillion a year ago. Operating income edged up 1.1% to 108 billion yen from 107 billion yen a year ago. Net income gained 6.9% to 45 billion yen from 42 billion yen. Mazda however maintained its full-year profit target at 85 billion yen.

Isuzu Motors Limited also reported third quarter profit leapt 12% to 24.4 billion yen from 21.9 billion yen a year ago. Sales during the quarter increased 7% to 430 billion yen. The company maintained its annual profit forecast at 80 billion yen. The stock closed up 0.47%.

All Nippon Airways Co. said Wednesday it will raise regular international airfares at Japanese airports by 6% to17% from April 1.

The company said fares on North American and Hawaiian routes will be increased by 13% and European routes will rise 6% to17%.