Nikkei sheds 2.46% despite new Bank of Japan stimulus measures
By Antonio Hermosín, Agustín de Gracia
Tokyo, Mar 16 (efe-epa).- The Tokyo Stock Exchange’s benchmark Nikkei index closed Monday with a 2.46 percent drop after Japan’s central bank announced new stimulus measures to soothe markets and ease the impact of the novel coronavirus.
Nikkei ended trading with a decrease of 429.01 points to stand at 17,002.04 while the broader Topix index, which tracks the companies with largest market capitalization, fell 25.36 points, or 2.01 percent, to 1,236.34 units.
The Tokyo stock exchange, which opened down Monday, bounced back after the Bank of Japan advanced its monetary policy meeting to Monday, but the measures announced proved insufficient for investors, as Nikkei ended the session with another sharp fall.
At its meeting, which concluded an hour before the close of the Tokyo stock market, the bank agreed to keep the benchmark interest rate unchanged and to increase the purchase of bonds and other instruments, as well as expand corporate financing, all to address COVID-19’s impact.
The decisions were announced at an emergency meeting of the bank, held two days ahead of schedule hours after the United States Federal Reserve cut interest rates to almost 0 percent.
In a statement released at the end of the meeting, the bank said it would keep the interest rate on balances in current accounts held by financial institutions at the central bank at minus 0.1 percent.
This negative interest rate has been in effect in Japan since early 2016.
It also agreed to continue the purchase of government bonds so that the yield of those who have long-term 10-year bonds remains at about 0 percent.
“With regard to the amount of [Japanese Government Bonds] to be purchased, the bank will conduct purchases in a flexible manner so that their amount outstanding will increase at an annual pace of about 80 trillion yen (about $750 billion),” the bank said.
It also said it would buy exchange-traded funds and Japan real estate investment trust with an upper limit of 12 trillion yen and 180 billion yen respectively.
The bank also announced measures to facilitate corporate financing including one-year loans to companies at an interest rate of 0 percent.
This facility will be in place until the end of September, the bank added.
The bank said it would increase the limit of purchase of corporate bonds by 2 trillion yen.
It also pledged to take steps to boost US dollar liquidity along with the central banks of five other countries – Canada, United Kingdom, Switzerland, United States and the European Union.
“Global financial and capital markets have been unstable, with growing uncertainties over the global economy due mainly to the impact of the outbreak of COVID-19,” the bank said in the statement.
“Under the circumstances, Japan’s economic activity has been weak recently,” it added. EFE-EPA