Japan central bank injects more cash
Japan's central bank injected an extra 2 trillion yen ($18.9 billion) into money markets on Wednesday to ensure liquidity.
By Agencies |
TOKYO: Japan's central bank injected an extra 2 trillion yen ($18.9 billion) into money markets on Wednesday to ensure liquidity as financial markets continue to assess the fallout from the demise of Wall Street giants Lehman Brothers and Merrill Lynch.
The move comes a day after the Bank of Japan pumped in 2.5 trillion ($24 billion), joining the US Federal Reserve and other central banks in a global effort to shore up confidence.
``The Bank of Japan will carefully monitor recent situations surrounding the U.S. financial institutions and their influences, and will continue to strive to ensure smooth settlement of funds and maintain stability in financial markets through measures such as appropriate money market operations,'' Gov. Masaaki Shirakawa said in a statement on Tuesday.
Later on Wednesday, the Bank of Japan is expected to keep its key interest rate unchanged at 0.5 per cent amid concerns about slowing domestic growth, rising inflation and volatile financial markets. Masaaki Kanno, chief economist at JP Morgan Securities in Tokyo, said the central bank is unlikely to cut rates until faced with serious economic deterioration.
``Indeed, while the first round effect from Lehman's failure on the economy and the financial markets is limited in Japan, the risk of the larger-than-expected second round effect through a global recession and global financial turmoil is growing,'' Kanno said in a research memo. ``If the risk materializes, Japanese exporters will be damaged with substantial yen appreciation and a fall in export volumes.''
Overnight the Federal Reserve kept monetary policy on hold, saying that strains in financial markets have ``increased significantly'' but that it would keep an eye on them and act, if needed.
The move comes a day after the Bank of Japan pumped in 2.5 trillion ($24 billion), joining the US Federal Reserve and other central banks in a global effort to shore up confidence.
``The Bank of Japan will carefully monitor recent situations surrounding the U.S. financial institutions and their influences, and will continue to strive to ensure smooth settlement of funds and maintain stability in financial markets through measures such as appropriate money market operations,'' Gov. Masaaki Shirakawa said in a statement on Tuesday.
Later on Wednesday, the Bank of Japan is expected to keep its key interest rate unchanged at 0.5 per cent amid concerns about slowing domestic growth, rising inflation and volatile financial markets. Masaaki Kanno, chief economist at JP Morgan Securities in Tokyo, said the central bank is unlikely to cut rates until faced with serious economic deterioration.
``Indeed, while the first round effect from Lehman's failure on the economy and the financial markets is limited in Japan, the risk of the larger-than-expected second round effect through a global recession and global financial turmoil is growing,'' Kanno said in a research memo. ``If the risk materializes, Japanese exporters will be damaged with substantial yen appreciation and a fall in export volumes.''
Overnight the Federal Reserve kept monetary policy on hold, saying that strains in financial markets have ``increased significantly'' but that it would keep an eye on them and act, if needed.
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