Japanese foreign exchange holdings at a record high

Japan is holding a mountain of US dollars. The Finance Minstry in Tokyo reported that Japan's foreign exchange reserves rose to an all-time high of 908.96 billion dollars at the end of March from the previous record of 905.05 billion dollars in February. Japan's large foreign exchange reserves are the result of years of currency intervention by the government to keep the yen down against the dollar and help exporters stay competitive. In other words, the Japanese have kept the Yen artiificially low so that they could flood US markets with cheap goods.

However, the Japanese are not the only ones playing this game. Japan’s foreign exchange reserves are the second largest in the world, after China, whose holdings reached 1.07 trillion dollars at the end of 2006.