2ND LD: BOJ pumps 1 trillion yen into money market in sync with ECB, Fed+
Aug 9 11:55 PM US/Eastern
Fed+ (AP) - TOKYO, Aug. 10 (Kyodo)—(EDS: ADDING COMMENTS OF FINANCE MINISTER OMI, INFO ON MARKET MOVEMENTS)
The Bank of Japan pumped 1 trillion yen ($8.5 billion) into the money market Friday after the European and U.S. central banks supplied liquidity in efforts to calm subprime-mortgage turmoil in global financial markets.
The central banks of Japan, the United States and Europe took a coordinated action to provide liquidity for the first time since the Sept. 11, 2001, terrorist attacks on the United States. The size of the BOJ's money injection was larger than usual, according to money market traders.
The European Central Bank injected 95 billion euros ($130 billion) into financial markets Thursday to alleviate fears of a credit crunch as worries about the U.S. subprime-mortgage market spread to the European economy.
Hours later, the Federal Reserve Board provided about $24 billion to the money market through the Federal Reserve Bank of New York.
The turbulence in global financial markets was triggered by Thursday's announcement by French banking giant BNP Paribas that it has suspended withdrawals from three of its investment funds exposed to high-risk subprime loans.
Japanese Finance Minister Koji Omi said at a press conference Friday morning that the action by the central banks was "quick and proper."
"The overall global economy is sound and the Japanese economy also keeps growing in a stable manner," he said. "I am personally not concerned about this issue (of subprime woes) very much, but will carefully monitor future developments."
With the spread of credit crunch fears, market expectations that the BOJ will implement a rate hike in the upcoming Aug. 22-23 policy meeting have receded rapidly.
Omi urged the Japanese central bank to come up with concrete steps to deal with the situation and support the country's economic growth from the monetary policy side.
Tokyo stocks plunged almost across the board Friday morning as financial issues were hit by fresh concerns about credit markets.
The 225-issue Nikkei Stock Average dropped 448.64 points, or 2.61 percent, in the morning to 16,721.96. Stocks opened sharply lower following the previous day's dives in European and U.S. equity markets.
New York stocks nosedived Thursday, with the Dow Jones Industrial Average plummeting more than 380 points, the largest fall since 416 points registered in late February on the occasion of global stock plunges.
In Tokyo, the benchmark long-term interest rate also fell Friday morning to briefly touch a two-and-a-half-month low of 1.705 percent, with investors buying Japanese government bonds that are considered less risky than other financial products.
In Japan, financial institutions' losses on the subprime-mortgage problem have not been clarified yet and the BOJ and the Financial Services Agency have been trying to grasp the overall picture. |
