JAPAN'S FOREIGN RESERVES FALL BY RECORD $80BN IN AUGUST

Japan's foreign reserves declined by 6.18 per cent in August, marking the fastest monthly drop since the finance ministry began recording data in 2000. Official figures showed reserves fell to $1.207 trillion from $1.287 trillion in July. This represented the fourth consecutive month of decline and exceeded the previous record set in May, when reserves had dropped 5.58 per cent.

The finance ministry did not publicly state the cause of the decline. Japanese media reported that an unnamed finance ministry official attributed the drop to currency interventions designed to support the yen and to a fall in the value of government bonds following a rise in yields. Japan conducted multiple rounds of intervention over recent months, purchasing approximately 11.73 trillion yen ($75.26 billion) in April and May, followed by a larger intervention of 15.4 trillion yen in late July, which the United States supplemented by selling euros. The total amount spent on intervention this year reached 27.1 trillion yen, the largest annual figure on record. According to reporting, Japan likely sold a portion of its foreign securities holdings, including US Treasuries, to finance the recent currency operations.

Masahiko Loo, senior fixed income strategist at State Street Investment Management, stated that the decline resulted primarily from Japan's recent dollar-selling and yen-buying foreign exchange interventions. Global bond yields have climbed to multiyear highs in recent months, with Germany, the United Kingdom and US Treasuries all reaching notable milestones.