Japan's FX Reserve Surplus Hits $31 Billion, Second-Highest Record

Japan's special government account for foreign exchange reserves logged a surplus of $31 billion in fiscal year 2025, the second-highest on record. The surplus is attributed to the weak yen boosting returns on foreign assets, particularly U.S. Treasuries. The yen's depreciation not only increased income from Treasuries but also offset interest costs.

The special account managed a total surplus of 5.06 trillion yen ($31 billion), second only to the 5.36 trillion yen recorded in fiscal year 2024. Of this amount, 3.13 trillion yen was transferred to the general account as revenue for fiscal 2026. The Finance Ministry also allocated 1.34 trillion yen to the foreign exchange fund and carried over 585 billion yen to the special account's fiscal 2026 revenue.

Prime Minister Sanae Takaichi has praised the performance of foreign reserves, stating they are 'performing very well.' The reserve surplus may be used to help fund a plan to suspend a consumption tax on food. The Finance Ministry's actions demonstrate the impact of monetary policy and currency fluctuations on government finances.