Yield on Euroyen rate futures plummets on stock plunge.
The yield on the key three-month Euroyen rate futures plummeted Monday morning, following a morning plunge in Tokyo stock prices.
The September contract yielded 0.290% on the Tokyo International Financial Futures Exchange, down from 0.360% at Friday's close.
Dealers said they were forced to buy Euroyen rate futures, bringing the yield down, by an unexpectedly large decline in the key Nikkei index, which lost 1,750.79 points, or 8.57%, from Friday to finish the morning session at 18,683.89.
The futures trading, however, lost direction around 11 a.m. when reports emerged that the policy chief of the ruling Liberal Democratic Party (LDP) had suggested an injection of public money to support the stock market.
LDP Policy Research Council head Shizuka Kamei said the party wants to consider measures to cope with Monday's stock price plunge, including an injection of more than 1 trillion yen in public funds into the market.
The comment has created new uncertainty over how Tokyo stock prices will move in the afternoon, futures dealers said.
Interest rates on lending contracts of at least three months' duration also began falling because Japan repeatedly pledged at Saturday's meeting of Group of Seven financial leaders to maintain the zero-rate policy for now.
The yield on No. 56 three-month financing bills slid 0.005 percentage point to 0.060%.
The benchmark unsecured overnight call rate, meanwhile, stayed unchanged from Friday's weighted average at 0.02% in the morning.
The Bank of Japan absorbed 200 billion yen from the banking system through a bill-selling operation, leaving around 5 trillion yen in bank reserves, the same level as that seen Friday.
The operation is calculated to have left the market with a fund surplus of 1.1 trillion yen, brokers said.
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|Publication:||Japan Weekly Monitor|
|Date:||Apr 24, 2000|
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