Japan's special account for foreign exchange reserves recorded a surplus of $31 billion in fiscal year 2025, the second-highest on record. A weaker yen boosted yen returns on foreign assets, offsetting interest costs on yen-denominated financing bills.
The substantial surplus in Japan's FX reserve account, bolstered by a weaker yen, provides additional revenue that could potentially fund government initiatives, impacting fiscal policy and the broader economic outlook.
Japan's special account for foreign exchange reserves recorded a surplus of $31 billion in the fiscal year that ended in March, marking the second-highest surplus on record. The Finance Ministry reported that the surplus, totaling 5.06 trillion yen, was primarily driven by the depreciation of the yen, which boosted the yen-denominated returns on the country's foreign assets, mainly U.S. Treasuries. This income more than offset the interest costs associated with the yen-denominated financing bills used to fund these assets, largely due to the wide interest rate differential between the U.S. and Japan. Of the total surplus, 3.13 trillion yen was transferred to the general account as revenue for fiscal year 2026, with 1.34 trillion yen allocated to the foreign exchange fund and 585 billion yen carried over to fiscal 2026 revenue. Prime Minister Sanae Takaichi noted that foreign reserves have been a significant beneficiary of the weak yen.