The reserves rose $ 766 million in June from the previous record peak of $ 864.112 billion in May, due to interest rate income from reserve assets, a MOF official said.

But overall gains in reserves were limited by a fall in the prices of gold and US Treasuries as well as a decline in the euro that dented the value of euro-denominated assets, the official said.

Japan does not give a breakdown of the currencies in its foreign reserves, but its historical data on forex intervention, which has consisted mainly of dollar-buying operations, shows that most of its hefty reserves are in dollars.

This keeps Japan at No. 2 on the list of the world’s largest reserves holders following China, whose reserves climbed to a record $ 875.1 billion at the end of March, the last month for which official figures are available.

China’s reserves are likely to have risen even further since then, with a senior Chinese government official having said in June that China’s foreign exchange reserves had risen above $ 900 billion as a result of the nation’s growing trade surplus.

In addition, the China Business News said last week that China’s foreign exchange reserves rose by $ 30 billion in May to $ 925 billion, citing unnamed officials.

The MOF official said the decline in gold prices was the main factor limiting gains in Japan’s reserves in June, followed by a drop in US Treasuries prices and an easing of the euro.

Gold fell to $ 613 per ounce by the end of June from $ 653 per ounce at the end of May, while 10-year US Treasury yields rose to 5.140 percent from 5.123 percent, and the euro eased to $ 1.2790 from $ 1.2809, the official said.

Japan’s reserves have hovered near record levels since March 2004, the last time Japan intervened in the currency market by buying dollars to help stem a rise in the yen to protect the country’s export-led recovery.

Japan sold a record 20 trillion yen to buy foreign currencies — mainly dollars — in 2003 and a further 15 trillion yen in the first three months of 2004 in its last foray into the market.

Since then it has held off from intervening, as the nation’s economic recovery has gained traction and as rises in US interest rates widened the dollar’s rate advantage over the yen, pushing the Japanese currency lower.