By Marcus Leach
As the fallout from the Japanese earthquake continues the Bank of Japan (BOJ) have moved to stabilise the financial markets with an unprecedented 15 trillion yen (£114 billion) injection of cash.
Tokyo’s Nikkei Index dropped 7% on the first day of trading after Friday’s disastrous quake, as the full effects became apparent.
The injection by BOJ is the single biggest ever made in a single transaction, and the bank has also announced steps to ease monetary policy.
“We will take every possible measure, including liquidity, to ensure the stability of financial markets,” a bank spokesman said.
Only now is the full extent of the damage caused becoming clear, as the country struggles with a huge clean-up operation, power shortages and the very real threat of a nuclear meltdown; all contributing to mass disruption of the economy.
Further to the initial injection of cash BOJ are expected to put a further 6.8 trillion yen (£45.4 billion) into the market over the next two days. There was also an announcement during their monetary policy meeting that the asset buying fund will increase by 5 trillion yen (£37.8 billion) in a bid to support businesses.
The move to expand the asset buying fund was, according to BOJ, to “preempt a deterioration in business sentiment.
With the effects of the quake, combined with tsunami and nuclear accident there is a very real fear now that the countries economy could slip back into recession.