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According to Brad Setser, a senior fellow at the Council on Foreign Relations, the Japanese government stands to make significant profits if they intervened in currency markets by selling dollars and buying yen. This is because Japan holds a large amount of foreign currency-denominated assets that were purchased when the yen was stronger. Setser explains that the Japanese authorities followed a basic investment strategy of buying low and selling high. It is believed that Japan conducted its first currency intervention since 2022 to support the yen, and it is estimated that they spent around $35 billion on this intervention. [Extracted from the article]

The article focuses on the proposal of several economic reformers in Japan to launch a sovereign wealth fund which could potentially boost returns on the country's currency reserves and pension assets. For one, a study group of legislators from the ruling Liberal Democratic Party to launch a sovereign wealth fund by the Japanese government. Separately, the Council on Economic and Fiscal Policy issued a report calling for major reforms in managing the Government Pension Investment Fund (GPIF) to improve performance after it posted a loss in fiscal 2008.

The article discusses the focus of the Japan Finance Organization for Municipalities (JFM) on returning to the international debt markets once the opportunity for cost efficient issuance opens. It relates how the formerly state-owned Japan Finance Corp. for Municipal Enterprises became a new entity known as the JFM. It notes that all assets and liabilities of the former JFM were transferred to the new entity including reserves of 3.4 trillion yen and a special reserve fund of 900 billion yen.

The article focuses on the trade relations between China and Japan. It states that the economic ties between the two countries have paved the way for the stable development of their bilateral relations. It is inferred that foreign trade between China and Japan has improved in quality. According to the article, both China and Japan have huge foreign exchange reserves.

The article reports on the plan of China, Japan and South Korea to set up a foreign exchange reserve fund along with the Association of Southeast Asian Nations (ASEAN). According to the article, the countries and the ASEAN will set up the fund in order to support each other to avoid possible financial risks from the U.S. subprime mortgage loan crisis. It is stated that the subprime crisis was similar to the Asian financial crisis in 1997.

The article discusses whether central banks should worry about capital losses. Like most monopolies, central banking can be a highly lucrative business. But not all central banks are fortunate. The European Central Bank made a loss in 2004, for the second year in a row. The Bank of Japan (BoJ) and other Asian central banks have amassed two trillion dollars in foreign-exchange reserves, perhaps 70% of them in dollars. Should the dollar fall, these central banks will be exposed to heavy capital losses. If China continues to amass reserves at its current pace, a 33% appreciation of the yuan at the end of 2006 might inflict a capital loss of almost 15% of GDP. Losses on such a scale would be deeply unsettling to any central banker. But they would not be unprecedented. Economists at Goldman Sachs reckon that Asian central banks, excluding Japan, hold twice the reserves they need. If these reserves were to lose their value, in local currency terms, the taxpayer might not rush to replace them.

Despite the rising cost of events such as earthquakes in Japan, the country's non-life insurers do not seem to be setting aside enough reserves to cover future disasters. Should a couple of huge catastrophes occur within several years of each other, there are concerns that some might have to dip into, and perhaps exhaust, their capital to cover the shortfall. The Financial Services Agency (FSA), the insurers' regulator, is worried. It wants to tighten rules on how to set aside reserves for natural disasters by April 2004, and is currently studying a report by an industry committee on what to do. About half the industry's premiums come from car insurance, for which policies are renewed annually. Yet in the past year or so, non-life insurers have been selling a growing number of long-term fire-insurance policies (which in Japan cover more general damage to property) that may commit them to huge pay-outs for natural disasters. So far the industry is not resisting the FSA's plans, though that might change if new rules requiring extra provisions pushed some firms into the red.

Discusses developments taking place in the international business as of March 1997. Reasons for the closure of a factory of Renault SA in Belgium; Information on the death of businessman Yahaya Ahmad of Malaysia's national automobile manufacturer Perusahaan Otomobil Nasional Bhd.; Report that AT&T Corp. is planning $2.6 billion-worth of cuts in the next two years; Focus on Japan's current-account surplus that leapt to $1.28 billion in January, four times its size a year earlier.

This article focuses on the mystery behind the capital flow in Japan. A current-account surplus need not go hand in hand with an outflow of both long- and short-term capital. Japan in the late 1980s and 1990s offers evidence. Despite its current-account surplus, Japan was borrowing short-term money from abroad in order to invest far larger sums in overseas assets. Then, after 1990, this peculiar relationship went into reverse. Despite a growing current-account surplus, long-term capital flowed into Japan, implying a correspondingly huge outflow of short-term capital.

The article probes into the proposal by Takatoshi Ito, a member of a Japanese government advisory committee, for the Japanese government to create sovereign wealth fund worth 33 billion U.S. dollars. He added that funding can be taken from the 1 trillion U.S. dollars the country earned in foreign reserves. Investment will focus on high-yield assets, such as foreign equities.