Japan's Forex Fund Special Account Eyed for Tax Cut Funding

Tokyo, Feb. 4 (Jiji Press)--Japan's foreign exchange fund special account is attracting attention as a possible source of funding for consumption tax reduction or elimination proposed by many parties ahead of Sunday's general election.

The account holds as its assets the foreign exchange reserves with huge investment returns from past yen-selling, dollar-buying market interventions and unrealized gains from a weak yen.

It has often been referred to as an untapped resource, but utilizing the funds involves some problems and is therefore considered difficult.

The account was established to conduct currency market interventions to address volatile exchange rate fluctuations. The total amount of the external reserves stood at 1,369.7 billion dollars as of the end of 2025, mostly held as U.S. government bonds.

The surplus in the special account stood at a record high of 5,360.3 billion yen at the end of fiscal 2024, reflecting higher investment returns, or interest income from foreign currency assets minus interest payments on yen-denominated debts, due to the weak yen.

[Copyright The Jiji Press, Ltd.]