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Updated: May 8, 2010 18:44 IST

Hatoyama urges efforts by ministers to contain market turmoil

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Japanese Prime Minister Yukio Hatoyama. File photo
ASSOCIATED PRESS Japanese Prime Minister Yukio Hatoyama. File photo

Japanese Prime Minister Yukio Hatoyama has ordered his Cabinet ministers to cooperate with other countries to deal with the turmoil in global financial markets, while the Bank of Japan pumped emergency funds into money markets.

“I am very concerned,” Mr. Hatoyama said yesterday, adding that the government should respond “steadily.” He asked the ministers to “control the situation through cooperation with other countries,” a government official cited him as saying.

The same day, the Bank of Japan (BOJ) provided $ 218.34 billion to the financial system in an emergency operation aimed at preventing any disruptions in money markets, where banks and other financial institutions lend short-term money to each other. It is the first such operation by the central bank since December.

Amid sharp falls in the euro and a stronger yen versus other major currencies, Japanese Finance Minister Naoto Kan said, “Excessive volatility is not favourable.”

In an apparent move to stabilize global financial markets, the Group of Seven advanced economies, including Japan, the United States and some European countries, held a teleconference yesterday.

On the stock markets, the 225-issue Nikkei Stock Average plunged 331.10 points, or 3.10 per cent, from Thursday to 10,364.59, the lowest closing in about two months.

National policy minister Yoshito Sengoku told a press conference he feels “great concern about rapid fluctuations” in stock prices.

“Orders to buy and sell, including those placed by speculative investors, have intensified,” he said.

The turmoil is due to the uncertainty spawned by the sovereign debt crisis in Greece and growing fears of a possible spillover into other European countries that have adopted the euro.

Kan said the impact of the Greek crisis on the Japanese economy is “extremely small,” apparently taking into consideration the recently secured around $ 140 billion rescue package by the European Union and the International Monetary Fund. He also said the currency market is expected to regain stability soon.

Financial Services Minister Shizuka Kamei said separately, however, “Japan cannot avoid suffering a (negative) impact.”

Even as European authorities are making desperate efforts to solve the problem, Japan, for its part, “unfortunately has no measures to block (such an impact) on financial markets,” he said.

As for how much of Greece’s government debt Japanese financial institutions own, Mr. Kamei said, “I don’t know how much each bank has bought, but I don’t think they have bought a huge amount.”

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