Years of currency manipulation by Japan's Ministry of Finance has left it with $1.27 trillion in foreign exchange reserves, most of which are invested in low-yielding U.S. Treasury bonds.
Following an account in Japan's Nikkei newspaper, Bloomberg News reported that the ministry is planning to outsource management of some of this money. Details about the plan are thin. Still, it could mark the first step toward the creation of a Japanese sovereign wealth fund that invests for profit.Countries that buy dollars and euros to suppress the value of their own currencies aren't trying to make money from their asset portfolios. Rather, they think that their purchases of foreign exchange are worthwhile because they increase the competitiveness of their export industries. (Some governments also hoard foreign currency as a hedge against the foreign borrowings of their local businesses, although this doesn't apply to Japan.) This can create opportunities for savvy currency traders to make money off the "uneconomic" decisions of certain central banks.
Source: NewsOnJapan
Source: NewsOnJapan
