BOJ leaves more cash with U.S. Fed: BAML

NEW YORK (Reuters) - The Bank of Japan has been leaving more cash at the Federal Reserve as its Treasury purchases from currency intervention four years ago matured and were repaid, Bank of America Merrill Lynch analysts said on Thursday.

The BOJ's increase in dollar holdings has coincided with the rise in the usage of the Fed's reverse repurchase agreement program for foreign central banks, they said.

"The close link suggests to us the flow of funds has been: the Japanese reserve portfolio let intervention purchases roll-off, left the cash at the N.Y. Fed reverse repo facility," Bank of America Merrill Lynch rates strategist Shyam Rajan and Dora Xia wrote in a research note.

In December 2015, the BOJ's securities holdings in its reserve portfolios was $1.064 trillion, down $115.13 billion from a year earlier, while its deposits grew to $113.7 billion, up 99.75 billion from a year ago, according to data from the Japanese Ministry of Finance.

Meanwhile, foreign official and international accounts had $246.65 billion in reverse repos with the Fed on Feb. 17, compared with $129.78 billion a year ago, Fed data showed.

In addition to the BOJ, analysts said Chinese and other central banks are keeping more money at the Fed as they have liquidated their U.S. Treasuries to raise cash in an attempt to stabilize their currencies.

(Reporting by Richard Leong; Editing by Chizu Nomiyama)

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