Alexa

Japanese government mulls steps to calm markets

Japanese 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.
But Japanese investors took scant comfort from the move and sent the Tokyo stock market's benchmark index to its lowest level in 26 years.
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. By the end of trading Monday, the Nikkei 225 index shed 486.18 points, or 6.36 percent, to 7,162.90 _ the worst closing level since October 1982. The index has lost more than 20 percent since last Monday and nearly 40 percent in the last month.
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 percent to a high of 90.89 yen to the dollar on Friday, its highest level since August 1995, before weakening some.
On Monday, the dollar was trading at 92.86 yen from 94.24 late Friday in New York.
The yen's surge 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."
The statement appeared to have little impact on investors, who continued to buy back the yen to unwind yen carry trades, which involve buying yen to invest in currencies with higher-yielding bonds and other assets. The global financial crisis has prompted investors into pulling money out of those investments, forcing them to buy back the yen and lifting its value.


Updated : 2021-04-12 12:36 GMT+08:00