Steady sales of Japan reserves an option-Watanabe

Japan may need to consider trimming its huge foreign reserves, but not just yet as the market is still bearish about the dollar, Tokyo's former currency policy tsar said.

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Tokyo has stayed out of the market since then but issues short-term financing bills to balance the account that holds its US$1 trillion in foreign reserves when the asset value increases on interest income on the deposits and securities in the reserves.

"One way to do it is to sell the same amount of foreign reserves every month no matter what happens, while fully disclosing its plans," Watanabe told Reuters in an interview on Wednesday.

"For instance, selling US$5 billion worth of dollars and maybe a small amount of euro holdings each month and sticking to the plan unless a natural disaster happens may be worthwhile to ease the stress on the short-term securities market."