Still, the October figure is the seventh-highest on record. "The largest factor behind the fall in reserves was a sharp rise in US yields, which boosted book losses on a mark-to-market basis," a senior MOF official said.
Yields on benchmark 10-year notes, which rise when prices fall, climbed 26 basis points in October to 4.56 percent at the end of October. The yield was at 4.61 percent in early Asia on Tuesday.
A fall in the euro also decreased the dollar-value of euro-denominated reserves, the official said. Japan's reserves had ballooned after yen-selling intervention of a record 20 trillion yen ($169.9 billion) in 2003 and a further 15 trillion yen in the first three months of 2004.
Japan has the largest foreign reserves in the world, although China is quickly closing the gap. China intervenes heavily in the foreign exchange market under its new managed float system that has kept its yuan currency trading near 8.09 to the US dollar.