Japan Mulls Moving Reserves from Dollar
Thursday, April 19, 2007 ABU DHABI -- Japan is cautious about shifting its foreign exchange reserves away from the dollar for fear of triggering a slide in the U.S. currency, Tokyo's top financial diplomat, Hiroshi Watanabe, said on Thursday.
At around $900 billion, Japan's reserves, held predominantly in dollars, are the world's second largest after China's and were built up mainly in 2003 and 2004 as the Bank of Japan bought dollars to check the Japanese currency's rise.
The dollar's slide against other currencies over the past three years has prompted central banks around the world to consider reducing their exposure to U.S. assets. The dollar tumbled to a two-year low against the euro this month.
"Most countries are diversifying their investments to non-U.S. dollar assets. But in the case of Japan, we are still cautious about shifting from the dollar to other currencies," Watanabe said in Abu Dhabi, capital of the United Arab Emirates.
"If we do that it goes towards the depreciation of the dollar. So why should we trigger such a stupid action?" Watanabe, vice finance minister for international affairs, said.