Japan's central bank said on Monday that it would inject 1.0 trillion yen (8.7 billion dollars) into the banking system as part of ongoing efforts to restore calm to financial markets.
The Bank of Japan moved to pump extra funds into the money market for a third straight working day as part of a concerted global drive by major central banks to calm fears about the fallout from US mortgage problems.
The latest injection came as Japanese share prices staged a strong rally after Friday's brutal selloff, lifted by a rebound on overseas markets following the US central bank's decision to cut a key interest rate on Friday. The BoJ's move aims to curb a rise in short-term interest rates caused by increased demand for new funds.
Central banks from Sydney to Washington have together pumped billions of dollars into the global financial system in recent days amid signs that private banks and firms are having trouble raising funds and rolling over debt.
The Fed has pumped a total 94 billion dollars into the financial markets since August 9 to ease tightening credit, including a further six billion dollars on Friday alone. Investors are now waiting anxiously for an interest rate decision from the Japannese central bank on Thursday Although expectations of a rate rise have faded following recent market turmoil, some analysts warn a hike cannot be ruled out.
"Amid lingering concerns over shrinking credit, the Bank of Japan has no other choice but to keep acting as the lender of last resort in the money market," Goldman Sachs Securities chief economist Tetsufumi Yamakawa said.
Comments
Comments are closed.