Rates on Hold in Japan

Darlington Musarurwa
07 Apr, 2010
New York City

Bank of Japan left its key lending rate unchanged at 0.1% in an unanimous vote and cited improving economic conditions in international economies. Foreign exchange reserves in February declined $8.4 to $1.04 trillion.

[R]5:00 AM New York, 7:00 PM Tokyo – Bank of Japan left its key lending rate unchanged at 0.1% in an unanimous vote and cited improving economic conditions in international economies. Foreign exchange reserves in February declined $8.4 to $1.04 trillion.[/R]

Japan stock indexes rose fractionally after Bank of Japan indicated that the country’s economy is picking up on improvement in overseas economic conditions and left its key lending rate unchanged.

Investors also noted with a comfort after the latest U.S. Federal Reserve minutes of meetings suggested that interest rates will remain low in the near future.

In Tokyo trading the Nikkei 225 Stock Average increased 0.1% or 10.51 to 11,292.83, and the broader Topix Index edged up 0.5% to 995.54.

In the first section of the Tokyo Stock Exchange 11.8 billion shares worth 801 billion yen were traded and in the second section 333 million shares valued at 2.6 billion yen changed hands.

Of the Nikkei 225 index stocks, 132 rose, 76 fell, and 17 were unchanged. Sumitomo Chemical Co. led gainers in the index shares with a rise of 5.5% followed by Resona Holdings advancing 4.6%.

Bank of Japan Holds Rates

Bank of Japan announced today that it has decided to hold its benchmark interest rate at 0.1%, noting that the country’s economy is picking up on improvement in overseas economic conditions.

The central bank says exports and production have been increasing driven by high growth in emerging economies.

In addition, the BOJ observes that the downside risks to economic activity have “somewhat diminished,” while inflation is expected to rise more than projected on high commodity prices supported by high growth rates in emerging markets.

The bank will maintain an extremely accommodative financial environment.

Foreign Reserve Assets Fall to $1.04 Trillion

Japan’s Ministry of Finance reported today that the country’s foreign reserve assets dropped by $8.4 billion from the previous month to $1.04 trillion in February.

Foreign currency reserves stood at $990 billion, while the IMF reserve, Special Drawing Rights and gold were at $4 billion, $20 billion and $27 billion respectively.

Other reserve assets stood at $413 million.

Nikkei Movers

Clarion Co Ltd led the decliners in the Nikkei 225 Stock Average with a loss of 3.3% followed by losses in Daikin Industries Ltd of 3.0%, in Aeon Co Ltd of 2.9%, in Pioneer Corp 2.7% and in Marui Group Co Ltd 2.6%.

Sumitomo Chemical Co Ltd led gainers in the Nikkei 225 Stock Average with a rise of 5.4% followed by gains in Resona Holdings, Inc 4.6%, in Nippon Express Co Ltd of 4.5% and in Shinsei Bank, Limited 4.3%.

Other Movers

Dainippon Screen Manufacturing Co Ltd climbed 3.1% to 462.00 yen after the company announced that it expected the extraordinary profit of 2,761 million yen caused by gain on sale of securities, for the fiscal year ended March 31.

Mitsubishi UFJ Financial Group, Inc advanced 2.6% to 503.00 yen.

Mizuho Financial Group, Inc climbed 2.1% to 187.00 yen.

Sumitomo Chemical Co added 5.4% to 480.00 yen after the chemical maker was upgraded to “strong outperform” from “outperform” at Mitsubishi UFJ.

THK Co Ltd advanced 2.1% to 2,075.00 yen after the industrial machinery maker was upgraded to “overweight” from “neutral” at JPMorgan Chase & Co.