Japan sprays more cash over jittery markets.
By Tomoko A. Hosaka
TOKYO: Japan's central bank sprayed more cash over jittery money markets Thursday as a major bank's ATMs suffered a two-and-a-half hour outage nationwide and the yen climbed to a record high.
The Bank of Japan injected an additional 6 trillion yen ($76.7 billion) in same-day funds after the dollar hit 76.25 yen in the morning -- an all-time low for the greenback in the aftermath of Friday's earthquake and tsunami that killed thousands and triggered an unfolding nuclear crisis. With same-day funds, banks in need can access cash immediately.
Germany's Finance Ministry said the finance ministers of the Group of Seven major industrialized nations will hold a conference call on the situation in Japan later Thursday but gave no details.
Mizuho Bank, Japan's third biggest lender, said 5,600 automatic cash dispensing machines were back online by midday after blacking out at about 9 a.m. It didn't explain the outage, which had added to already rattled nerves.
The capital Tokyo endured more rolling blackouts Thursday and faces months of power shortages because of earthquake damage to nuclear and conventional power plants.
The utility that serves Tokyo has been forced to slash power supplies by a quarter. Power to parts of the sprawling region, which produces 40 percent of Japan's economic output, is cut for three hours a day.
Around the country, people queued for fuel and emptied supermarket shelves of food and other necessities. Hundreds of thousands of people in the devastated northeast continued to shelter in temporary accommodation.
Driving the yen to unprecedented highs were predictions that big Japanese investors like insurance companies would repatriate funds from overseas en masse to cover the cost of tsunami damage to northeastern Japan, said Masafumi Yamamoto, chief foreign exchange strategist at Barclays Capital in Tokyo.
The repatriation hasn't happened yet, so the volatility is "highly speculative," he said. The market is now betting that the Finance Ministry and Bank of Japan will intervene to buy the dollar and weaken the yen, possibly in coordination with other G-7 nations. A strong yen hurts Japan's exporters, potentially deepening the already severe hit to the world's No. 3 economy from the multiple disasters.
Analysts at Goldman Sachs estimated that Japan's disaster losses could reach $200 billion, more than 3 percent of Japan's gross domestic product.
The hardest hit prefectures (states) -- Iwate, Miyagi, Fukushima and Ibaraki -- represent about 7 percent of the country's economy.
The region is home to steel plants, oil refineries, nuclear power plants and factories making parts for cars and electronics. Roads and other transport networks are crippled, while power supplies are constrained.
The latest offer of central bank funding didn't stop stocks losing ground again. The Nikkei 225 stock average closed down 1.4 percent at 8,962.67 after plunging Monday and Tuesday before partly recovering Wednesday.
The Bank of Japan conducted emergency operations for the fourth day in a row, adding to the 55.6 trillion ($688 billion) it provided money markets the previous three days. Of that figure, 28 trillion yen were same-day funds.
By flooding the banking system with money, it hopes banks will continue lending and meet the expected surge in the demand for post-disaster funds.
Financial markets nervously monitored the rapidly changing situation at a crippled nuclear power plant in the northeast. Japanese military helicopters dumped loads of seawater onto the plant Thursday, trying to cool dangerously overheated uranium fuel rods.
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|Publication:||The Daily Star (Beirut, Lebanon)|
|Date:||Mar 18, 2011|
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