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Japan government mulls steps to calm markets

Japan government mulls steps to calm markets

Japan's Prime Minister Taro Aso on Monday told senior officials to draw up measures to calm volatile stock markets and to fend off further fallout from the global financial crisis.
At an emergency meeting of the Cabinet and ruling party officials, Aso urged steps including tighter controls on short-selling and expanding a government fund to recapitalize banks to as much as 10 trillion yen ($106.1 billion) from 2 trillion yen, according to Kyodo news agency.
"Stock prices are having a major impact on the real economy," Aso said told reporters after the meeting. "We need to consider and implement different strategies."
Slammed by a relentless slew of bad economic news, Japanese equity markets have retreated sharply over the past two weeks. The benchmark Nikkei 225 index on Friday plummeted 9.6 percent to a five-year low, as a surging yen dragged exporters sharply lower.
Tokyo stock prices are "falling extremely rapidly, which is not positive for Japan's economy or sentiment," Japanese Finance Minister Shoichi Nakagawa said earlier in the day. "I am very worried."
The Japanese currency rose more than 7.4 percent to a high of 90.89 yen to the dollar on Friday, its highest level since August 1995.
The jump darkens earnings prospects for the nation's exporters by making Japanese products more expensive abroad and reduces the value of overseas profits when repatriated.
Although Aso did not suggest intervention in foreign exchange markets, the Group of Seven finance ministers and their countries' central bank governors expressed concern Monday about the yen's movement.
"We are concerned about the recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability," a statement said. "We continue to monitor markets closely, and cooperate as appropriate."
On Monday afternoon, Japanese key stock erased early gains and headed into negative territory. The Nikkei 225 stock average fell 1.66 percent to 7,522.36.
In currencies, the dollar recovered to 93.89 yen, leading investors to buy back some exporter stocks.


Updated : 2020-12-03 03:52 GMT+08:00