Japan's FX Reserve Account Logs Record $31 Billion Surplus in FY2025

Japan's special government account for foreign exchange reserves logged a surplus of $31 billion for the fiscal year ending March 2025, marking the second-highest surplus on record. This significant financial gain was largely attributed to the depreciation of the yen, which enhanced the returns on Japan's foreign assets when converted back into yen.

The total surplus from the account, responsible for managing reserves used in currency market interventions, amounted to 5.06 trillion yen. This figure is second only to the 5.36 trillion yen recorded in fiscal year 2024. The assets within this account are primarily invested in U.S. Treasuries and are financed through yen-denominated bills. The income generated from these Treasury investments, bolstered by the substantial interest rate differential between the U.S. and Japan, more than offset the financing costs.

In terms of fund allocation, 3.13 trillion yen of the surplus has been designated as revenue for the fiscal 2026 general account. An additional 1.34 trillion yen has been allocated to the foreign exchange fund, and 585 billion yen will be carried over as revenue for the special account in fiscal 2026. Prime Minister Sanae Takaichi previously noted the benefits of a weak yen on foreign reserves, stating they were "performing very well."

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foreign reserves were a major beneficiary of the weak yen and were 'performing very well.'