First it was the BRIC nations — Brazil, Russia, India and China. Now it’s Japan.
Everyone seems to be going after the dollar. That includes Japan’s opposition party, which is expected to win the country’s election next month.
It said Japan should consider taking $1 trillion out of its foreign reserve kitty and exchange those dollars for International Monetary Fund bonds.
“In the medium- to long-term, we need to do what we can to avoid the risk of currency losses or economic turbulence that could result if the dollar were to swing,” Masaharu Nakagawa, shadow finance minister of the Democratic Party, told Bloomberg. “Many countries are starting to diversify their reserves.”
Perhaps the Democratic Party is just trying to distinguish itself from the ruling Liberal Democratic Party. Its Finance Minister Kaoru Yosano has said his trust in Treasury bonds is “unshakable.”
That’s good news given that Japan is the second-biggest foreign holder of Treasury bonds after China, to the tune of $685.9 billion.
“The current reality of Japan’s foreign currency reserves is that their heavy weighting toward dollar assets means any fall in the dollar’s value leads to valuation losses,” Susumu Kato, chief economist Calyon Securities Tokyo, told Bloomberg.
Many experts say countries’ rants against the dollar have little significance.
Economist David Wang wrote on Bloggingstocks.com that the BRIC countries’ central banks aren’t even strong enough to protect their own currencies from inflation, let along turn them into reserve currencies.
© 2017 Newsmax. All rights reserved.