Bank of Japan Left Rates at 0.3%

123jump.com Staff
21 Nov, 2008
New York City

Asian stocks rallied on the hopes that more government intervention in the region will bolster the economic growth and sustain the domestic demand. The Bank of Japan kept its key lending rate at 0.3% and indicated that it is ready to add more liquidity in the financial system.

[R]5:00AM New York, 7:00PM Tokyo - Bank of Japan keeps rate at 0.3%. Toyota plans to cut 50% of its workforce by March 2009.[/R]

Japan market averages rose 2.7% on short covering as stocks traded at three-year lows on the deepening recession fears.

In Tokyo trading Nikkei 225 rose 2.7% or 207.75 to 7,910.79 and fell 6.5% for the week. The broader Topix Index slid 2.6% or 20.41 to 802.69 and lost 5.2% in the week.

In the first section of the Tokyo Stock Exchange 24 billion shares worth 1.8 trillion yen were traded and in the second section 308 million shares valued 2.8 billion yen changed hands.

Of the Nikkei 225 stocks 177 rose, 41 declined, and 7 were unchanged. Sumitomo Metal Mining led advancers in the index shares with a rise of 16.5%.

Bank of Japan Keeps Rate at 0.3%

The Bank of Japan today unanimously elected to hold its key rate at 0.3% as economic activity remains sluggish. The central bank forecasts that the CPI inflation rate will moderate on falling price of petroleum products and stabilization of food prices.

Outlook remains uncertain and the monetary authorities say it will take “some time for the necessary conditions for Japan''s economic recovery to be satisfied.”

Current lending attitudes of financial institutions and issuing conditions in the corporate bond and short term lending markets is expected to further depress economic activity.

“The Bank will carry out purchases of CP under repurchase agreements more flexibly to facilitate corporate financing,” said the BoJ in a statement.

Nikkei News also reported that Bank of Japan Governor Masaaki Shirakawa said the central bank will ratchet up efforts to supply the financial markets with ample liquidity and intimated that the central bank might shelve plans for further rate cuts.

Toyota to Cut Workers to 3,000 by End of March

Bloomberg News reported today that Toyota Motor Corp. said it will cut 50% of its workforce to 3,000 from 6,000 by the end of March on falling global demand.

The automaker forecasts that full-year profit will drop 68%.

U.S. sales will drop for the first time in 13 years and it will eliminate 50% of its 500 temporary workers at the Georgetown plant during the first three months of 2009.

Gainers & Losers

Sumitomo Metal Mining led advancers in the Nikkei 225 index shares with a rise of 16.5% followed by increases in Mizuho Financial Group of 13.9%,, in T&D Holdings of 13.5%, in Konica Minolta Holdings of 13.4%, and Fanuc Ltd. of 13.4%.

Sompo Japan Insurance led decliners in the Nikkei 225 index shares with a drop of 11.4% followed by losses in Tokio Marine HD of 9.2%, in Hokuetsu Paper of 6.3%, in Bridgestone Corp. of 5.3%, and Nichirei Corp. of 4.9%.

Company News

The Nikkei News reported today that Nippon Steel Work will invest 30 billion yen to ramp up operations in its nuclear business as it strategically positions for “a potential nuclear renaissance”.