Bank of Japan unveils new credit measures
Tuesday, 14 October 2008 14:04Japan's central bank today announced new steps in a bid to keep credit flowing amid the financial crisis but left its key interest rate steady at 0.5% at an extraordinary policy meeting.
The Bank of Japan will supply banks with unlimited amounts of dollars at a fixed rate against the appropriate collateral, following the lead of European central banks, it said in a statement.
It pledged to ensure sufficient funds in the banking system over the year-end period and to take action to ease tensions in the bond market.
The steps were taken 'with a view to safeguarding stability in Japanese financial markets,' the bank said at the end of a previously unscheduled monetary policy meeting, which was announced just hours earlier.
Japan's Nikkei stock index posted its biggest ever gain today, skyrocketing more than 14% as investors cheered international efforts to aid banks crippled by the credit crunch.
The benchmark soared 1,171 points, or 14.15%, to end at 9,448, rebounding after its largest loss in two decades on Friday.
It was a spectacular turnaround for the Nikkei, which plunged 9.6% on Friday, the biggest loss in two decades, capping its worst week ever. Japanese markets were closed on Monday.
The index is still down 38% in 2008, however, battered by worries about a global financial crisis and a worldwide economic slowdown.
Toyota Motor leapt 16% to 3,720 yen. Sony jumped 17% to 2,785 yen.
The rally came after Wall Street's Dow Jones index surged 936.42 points, or 11%, to 9,388 yesterday - its biggest points gain on record and the sharpest percentage rise since 1933 during the Great Depression.
