The dollar is acutely vulnerable to any diversification from Japan. Tokyo not only has the world's largest reserves, but also holds an unusually high proportion, estimated at 75-80 per cent, in dollars.
Furthermore Japan has not intervened in the currency market since March 2004, meaning its reserves are essentially flat.
Some amusing excerpts: Japan's ministry of finance (MoF) moved quickly to quash any suggestion that policy had changed.
Mastatsugu Asakawa, director of the foreign exchange division at the ministry, denied Japan's policy had shifted. "We have never thought about currency diversification," he said, saying the prime minister was referring to asset-class diversification within a particular currency.
"The prime minister's response was very clear. He did not say anything about his intention to diversify our foreign reserves in terms of currency," said Mr Asakawa. "He said something in general that, from a risk management perspective, obviously diversification is needed."
[Uh-huh, yep, very clear, keep talking. And..]
Masaaki Kanno, economist at JPMorgan, said the prime minister needed to be cautious about comments on currency policy and should not depart from the script.
[The script, as opposed to the dollar?]
http://news.ft.com/cms/s/c3cd4824-918b-11d9-8a7a-00000e2511c8.html
If even Japan "goes wobbly", it's game over for the current US economic trajectory. And the so-called "Bretton Woods II".