Strong Euro, soaring gold tip Japan foreign reserves above trillion dollars

TOKYO, March 7, 2008 (AFP) – Japan’s foreign exchange reserves have topped the one-trillion-dollar mark for the first time, led by the soaring value of gold and the euro, the government said Friday. At the end of February Japan had a total of 979.17 billion dollars in foreign currency, with the rest in gold or International Monetary Fund reserves and special drawing rights, the finance ministry said. The reserves hit 1.008 trillion dollars at the end of February, the eighth straight month it has hit a record high. The reserves were up 1.18 percent from the previous month.

Japan has the second-largest foreign exchange reserves in the world after China, helping shield Asia’s two largest economies from external shocks.

The reserves are so large that China last year launched a state investment fund to manage them and Japan has recently started studying a sovereign wealth fund.

Japan’s foreign exchange reserves were boosted particularly by a rise in gold prices amid global financial market volatility, finance ministry data showed.

Gold prices increased to 971.5 dollars per troy ounce at the end of February from 923.3 dollars in late January, raising the value of Japan’s gold holdings,