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Bank
of Japan further eases credit policy
Tokyo, Aug 14: The Bank of Japan surprised financial
markets on Tuesday by loosening its already ultra-easy credit
policy in a bid to pull Japan from the edge of recession and
soften the pain of the prime minister’s pledged reforms.
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Dollar edges
up as yen loses
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London, Aug 14: The yen fell
half a per cent against the dollar and hit 3-1/2 month
lows against the euro on Tuesday after the Bank of Japan’s
surprise easing of its already super-loose monetary policy.
The BOJ raised its target for banks’ reserves it holds
to six trillion yen ($48.98 billion) from five trillion
yen and said it would increase its outright purchases
of Japanese government bonds to 600 billion yen a month
from 400 billion yen.
The US currency emerged winner in European trade, rising
a quarter per cent against the euro, on the back of unwinding
of long euro positions following the single currency’s
gains of over three per cent this month. “Profit-taking
in the euro combined with new steps toward quantitative
easing in Japan have worked together to boost the dollar,”
said a currency strategist. |
The central bank expanded its so-called
quantitative easing policy, its fourth easing this year, by
promising more funds to boost bank reserves and by increasing
the amount of Japanese government bonds (JGBs) it buys monthly
from the market.
“The global economy is falling at a stronger pace than we
had previously thought,” BOJ Governor Masaru Hayami said.
“At home, share prices have been falling. Banking shares have
been falling amid downgradings of their credit ratings, and
investors are worried,” he said.
“We cannot help but think that downside risks to the economy
are becoming a reality.” The easing in the central bank’s
unorthodox policy comes as the world’s number-two economy
continues to stumble despite interest rates already at zero.
-- Reuters
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