Bank of Japan to Add Liquidity Only

Darlington Musarurwa
02 Dec, 2009
New York City

Bank of Japan after the emergency session agreed to provide short term additional liquidity of 1 trillion yen, left rates unrevised at 0.1% and offered no plan to purchase additional debt. Prime Minister Hatoyama met with Bank of Japan governor Masaaki Shirakawa.

[R]5:00 AM New York, 7:00 PM Tokyo – Bank of Japan after the emergency session agreed to provide short term additional liquidity of 1 trillion yen, left rates unrevised at 0.1% and offered no plan to purchase additional debt. Prime Minister Hatoyama met with Bank of Japan governor Masaaki Shirakawa.[/R]

Japan’s stock market rose 0.4% buoyed by rising commodity stocks as gold rose to a record $1,200 per ounce.

Crude oil prices also climbed 1.7% to $78.80 per barrel.

In Tokyo trading Nikkei 225 Index gained 1.4% or 36.74 to 9,608.94, and the broader Topix Index advanced 0.1% to 858.74.

In the first section of the Tokyo Stock Exchange 11.4 million shares valued at 700 billion yen were traded and in the second section 413 million shares valued at 3.6 billion yen changed hands.

Of the Nikkei 225 index stocks, 100 rose, 110 dropped, and 15 were unchanged. Hino Motors led gainers in the index shares with a rise of 5.5% followed by Tosoh Corp soaring 5%.

Steel makers jumped. Nippon Steel edged up 2.7% to 337 yen and JFE Holdings jumped 2.4% to 3,016 yen.

BoJ Eases Monetary Policy

Bank of Japan after yesterday’s emergency meeting said that monetary policy may need to be accommodative as the momentum in business investment and private consumption lag.

The central bank will be introducing a new funds supplying operation to encourage further drop in longer-interest rates. Under the new operation, about 1 trillion yen will be provided to the market at a fixed rate of 0.1%, and funding will last for three months.

The central bank also left the key rate unchanged and offered no new plan to purchase debt from the government or corporation.

“The Bank recognizes that it is a critical challenge for Japan’s economy to overcome deflation and return to n a sustainable growth path with price stability,” said the central bank.

Nikkei News reported today Bank of Japan will immediately make available 1 trillion yen for a short term loan of three-month.

Hitoyama to Meet BoJ Governor

The online edition of Nikkei News reported that Chief Cabinet Secretary Hirofumi Hirano said Prime Minister Yukio Hatoyama will meet with the Bank of Japan Governor Masaaki Shirakawa today.

“It is important for the government and the central bank to share the same views on such issues as the economy, foreign exchange and stock prices. It is in Japan''s best interests that the two institutions implement policy measures independently based on shared beliefs,” said Hirano.

The central bank governor Masaaki Shirakawa met with Prime Minister Yukio Hatoyama in an apparent attempt to iron out differences and develop common goals to tackle mounting deflation worries.

Gainers & Losers

Hino Motors led gainers in the Nikkei 225 index stocks with a rise of 5.5% followed by increases in Tosoh Corp. of 5%, in NTT Data Corp. of 4.8%, in Fujitsu Ltd. of 4.8%, and Tokyo Electron of 3.9%.

The yen dropped 0.04% to 86.99 against the dollar.

Sumco Corp. led decliners in the Nikkei 225 index stocks with a fall of 8.8% followed by losses in Mitsui Chemicals of 3.7%, in Tobu Railways of 3.3%, in Sumitomo Chemical Co. of 3.1%, and Unitika of 3%.

Financial stocks fell. Shinsei Bank plunged 2.7% to 110 yen and Mitsubishi UFJ Financial Group declined 2.2% to 481 yen.