BoJ Keeps Rate at 0.1%; Banks Trade Lower

Darlington Musarurwa
18 Dec, 2009
New York City

Bank of Japan left its key lending rate at 0.1% and said that it will not tolerate deflation. Banks in Tokyo trading declined after the Basel committee of international regulators recommended higher capital and larger liquidity at banks. Japan steel production rises 0.5% to 8.9 million metric tons.

[R]5:00 AM New York, 7:00 PM Tokyo – Bank of Japan left its key lending rate at 0.1% and said that it will not tolerate deflation. Banks in Tokyo trading declined after the Basel committee of international regulators recommended higher capital and larger liquidity at banks. Japan steel production rises 0.5% to 8.9 million metric tons in November.[/R]

The benchmark stock index dropped 0.2% led by financial stocks on investor worries the new parameters set by international regulators for banks to boost capital from 2012 will affect profitability.

Losses were trimmed by a Bank of Japan announcement that it will not tolerate falling consumer prices.

In Tokyo trading Nikkei 225 Stock Average decreased 0.2% or 21.75 to 10, 142 .05, and adding 0.3% for the week, and the broader Topix Index dropped 0.3% to 893.59, but gaining 0.6% for the week.

In the first section of the Tokyo Stock Exchange 8.5 billion shares worth 542 billion yen were traded and in the second section 195 million shares valued at 2.1 billion yen changed hands.

Of the Nikkei 225 index stocks, 95 rose, 110 declined, and 20 were unchanged. Sanyo Electric led gainers in the index shares with a rise of 3% followed by an increase of 2.98% in Japan Airlines%.

The yen edged higher to 88.97 to a dollar from 90.09 yen.

Bank of Japan Keeps Rates at 0.1%

Bank of Japan today elected to keep its benchmark interest rate at 0.1%.

The central bank noted that though the economy is picking up, there “is not yet sufficient momentum to support a self-sustaining recovery in domestic private demand.”

Improvements of the economy are projected to remain moderate until around the middle of fiscal 2010.

The BoJ indicated that it will maintain an extremely accommodative financial environment.

“The Policy Board does not tolerate a year-on-year rate of change in CPI equal to or below zero and that the midpoints of the most Policy Board members’ understanding are around 1%,” noted the accompanying statement.

Japan Steel Output Rises 0.5% in November

Japan Iron and Steel Federation announced today that the country’s steel output edged up 0.5% to 8.9 million metric tons in November, rising for the first time in 14 months.

Toyota Unions Likely to Forgo Wage Hike in 2010

Japan Today reported that the Federation of All Toyota Workers’ Unions, which is an umbrella body of Toyota Motor Corp. group of labor unions, is expected to recommend no uniform demand for a regular wage hike for its members in the 2010 business year.

A formal decision is expected to be made at a union meeting scheduled for mid-January.

In addition, Toyota Motor Workers’ Union is also considered likely to forgo demand for wage hikes.

Nikkei Movers

Sumitomo Mitsui Financial Group, Inc led the decliners in the Nikkei 225 Stock Average with a loss of 4.8% followed by losses in Shinsei Bank, Limited of 4.2%, in Mitsubishi Corporation of 3.8%, in Seven & i Holdings Co., Ltd 3.2% and in Sumitomo Metal Mining Co., Ltd 3.0%.

Sanyo Electric Co., Ltd led gainers in the index with a rise of 3.0% followed by gains in Japan Airlines Corporation 2.9%, in Sumitomo Osaka Cement Co., Ltd of 2.9% and in Denki Kagaku Kogyo Kabushiki Kaisha of 2.8 %.

Other Movers

Mitsubishi Corporation decreased 3.8% to ¥2,140.00.

Mizuho Financial Group, Inc fell 3.2% to ¥179.00 and Sumitomo Mitsui Financial Group, Inc decreased 4.8% to ¥2,840.00 after the international regulators recommended higher capital, better quality of reserve capital and permanent 30-day liquidity for global banks.

Mitsubishi UFJ Financial Group, Inc dropped 0.4% to ¥462.00 and the demand for its offering of ¥1,031 billion or $11.5 billion exceeds three times the offering.

Nippon Oil Corporation added 2.5% to ¥400.00 after the refiner said executives from a Japanese consortium led by company are trying to set up meetings in Baghdad later this month in a bid to rescue the troubled Nassiriyah oil project from collapse, a company source told International Oil Daily Thursday.

Sony Corporation declined 1.5% to ¥2,550.00.

Sumitomo Metal Mining Co., Ltd the gold producer fell 3.0% to ¥1,363.00 after international prices of gold and copper declined in London trading.