Japanese stocks tumbled today and the central bank poured a record amount of cash in a bid to soothe money markets shaken by Japan's biggest ever earthquake, a devastating tsunami and a nuclear emergency.
Stocks saw a massive sell-off, with car makers slumping while banks and electronics firms also suffered heavy losses as power shortages prompted blackouts and plants remained closed in quake hit areas, hurting production.
The Bank of Japan said it would pump a record 15 trillion yen ($184 billion) to help stabilise the short term-money market, making good on its pledge yesterday that it would unleash 'massive' funds following the quake. The bank will provide an additional 3 trillion yen on Wednesday.
Tokyo shares plunged over 6% today with the key Nikkei index slumping below 10,000 to its lowest levels since November, down 626 points at 9,628. Many top Japanese firms have said they are suspending operations.
Car makers Toyota, Nissan and Honda have announced the suspension of production in Japan for the time being. At one point Toyota and Nissan slumped more than 10% while Honda gave up more than 8% before all three bounced back.
The government has said it expects a 'considerable' economic impact from the huge earthquake and devastating tsunami that plunged the nation into what Prime Minister Naoto Kan called its worst crisis since the Second World War.
The priority of the central bank is to ensure financial institutions in disaster-hit regions do not run out of funds. Over the weekend it provided them with 55 billion yen to ease the pressure before today's fresh fund move.
It was the first time since May, when European sovereign-debt fears pushed up the yen steeply and weighed on Tokyo shares, that the central bank injected same-day funds to boost confidence.
The Bank of Japan's two-day policy board meeting previously scheduled for today and tomorrow would now be cut short and conclude today, seen as a sign it may quickly implement further measures.
Economists say it is still too early to assess the cost of the destruction from the record 8.9-magnitude quake and the 10-metre wall of water that laid waste to swathes of the northeastern coast and triggered an atomic emergency.
A mammoth rebuilding task will be required in the aftermath of a disaster whose economic impact is widely expected to be at least as bad as that from the 1995 Kobe earthquake. The official death toll is certain to rise substantially to more than 10,000.
The quake and tsunami have damaged or closed down key ports, although airports such as Tokyo's Narita have reopened. Transport infrastructure such as train lines and roads have been crippled along parts of the northeast.
Japan releases oil reserves to cover three days' use
Japan will release 1.26 million kilolitres of crude oil from privately-held reserves, enough to meet demand for three days, Japanese Trade Minister Banri Kaieda said today.
Japan had national reserves of 113 days of oil demand under the government's storage and 85 days held by the private sector at the end of December.
'We require the private sector to hold 70 days as oil reserves, but we'll make the period shorter by three days to 67 days. That means we're releasing 1.26 million kilolitres,' Kaieda said.
Japan's energy sector is struggling to meet demand after Friday's giant earthquake and the ensuing tsunami crippled several nuclear power plants and cut power to almost 2 million people in the north of the country.
