Japan Lowers Rates to 0.3%

123jump.com Staff
31 Oct, 2008
New York City

The Bank of Japan lowered rates by 20 basis points to 0.3%. The BoJ chairman casted the decisive vote. In trading, Nikkei 225 index fell 5% to 8,576. The benchmark index dropped 24% in October. Nikon Corp cuts its profit estimate by 40%.

[R]5:00AM New York, 7:00PM Tokyo – The Bank of Japan lowered rate to 0.3% from 0.5%. Nikkei 225 index fell 4% in October.[/R]

Japan stock indexes plunged 5% on bearish earnings forecasts from Mazda and Nikon Corp. on a strong yen and lingering recession worries. Crude oil and metal prices dropped after a fall in U.S.''s third quarter gross domestic product.

In Tokyo trading Nikkei fell 5% or 452.78 to 8,576.98, rising 12% for the week and the most since 1970, and the broader Topix Index declined 3.6% or 32.25 to 867.12.

However the Nikkei fell 24% for the month of October.

In the first section of the Tokyo Stock Exchange 27 billion shares worth 2.2 trillion yen were traded and in the second section 314 million shares valued at 3.8 billion yen changed hands.

Of the Nikkei 225 index stocks 31 rose, 190 declined, and 4 were unchanged. Softbank Corp. led advancers in the index shares after mobile telephone service provider reported subscriber growth on the introduction of the Apple iPhone.

Bank of Japan Cuts Rate to 0.3%

The Bank of Japan today voted to slash base rate by 20 basis points to 0.3% after a 4-4 split. Chairman Masaaki Shirakawa casted the decisive vote.

The BoJ will introduce a complementary deposit facility through which it will pay 0.1% interest, 20 basis points below the target rate of 0.3% for reserve balances that are above the stipulated reserve deposit requirements.

The facility will be effective from November and will run until the March 2009 reserve maintenance period.

The central bank noted the country''s economic conditions will remain constrained in the short to medium term, with exports expected to level off.

The central bank estimated the gross domestic product for fiscal 2008 and 2009 is likely to be flat and 0.5% respectively as economic growth decelerates. Exports and domestic private demand will remain sluggish in the period between fiscal 2008 and 2010.

The central bank in the outlook review, """"The influence of the turmoil in global financial markets has been emerging in Japanese financial markets as can be seen in nervous conditions in money markets and significant declines in stock prices.”

Short-Sellers to Report Large Bets

The Nikkei News reported today that Japan will require short sellers to declare transactions that exceed a certain threshold from November 7.

Gainers & Losers

Softbank Corp. led advancers in the Nikkei 225 index shares with a rise of 11.8% followed by increases in Komatsu Ltd. of 19.5%, in Canon Inc. of 9.9%, in Shinko Securities of 8.26%, and Nissan Chemical Industries of 6.9%.

Softbank rose after the company reported net increase in subscribers on the introduction of the Apple iPhone.

Fuji Electric House led decliners in the Nikkei 225 index shares with a fall of 19.5%, in Nikon Corp. of 18.1%, in Pioneer Corp. of 15.2%, in Nippon Soda Co. of 14.8%, and Mazda Motors of 13.8%.

Mazda said profit in the April-September period rose to 29.5 billion yen on rising sales in China and Europe. However a rising yen trimmed gains.

Nikon Corp cut its profit estimate by 40% to 47 billion yen from 75.5 billion yen a year and expects sales to fall 4% to 940 billion yen on weak demand for semiconductor making equipment and a stronger yen.