A fall of the Japanese rates at the conclusion of the meeting of monetary policy of Friday would be the first since seven years. It will be well discussed with the day order of the meeting of the Bank of Japan (BoJ), declared at Reuters a source being informed of the debates. The Nikkei economic daily newspaper evoked on its side a fall of 25 basic points. ( Finance Information City )
The Japanese rates are already very low, the main thing of them being fixed at 0,5%. But a fall would have the merit to constitute a message of support of the monetary authorities to the multiple initiatives adopted to try to avoid a world recession.
The Japanese economy is already touched and seems even increasingly vulnerable to the financial crisis and with its economic repercussions, the analysts underline.
BoJ for the moment abstained from softening its monetary policy, including during the spectacular coordinated fall of rate of last October 8, thus dissociating American Federal fund and European Central bank (ECB).
But it seems that it is given to show that it assumes its share of the burden before the top of G20 envisaged the next month in the United States.
“If BoJ does not lower its rates Friday, Japan will be in difficulty at the same time on the financial markets and in the field of the international policy”, estimates Susumu Kato, economist chief of Calyon to Tokyo. “Japan would not have its word to say at the time of the financial top of November 15.”
TO ACT BEFORE G20 OF November 15
The situation of the archipelago worsened these last days with the flight of the yen, considered as a blue-chip stock, a movement which penalizes the export businesses heavily.
And the official statement of G7 published Monday to regret the volatility of the Japanese currency did not have practically any effect, the investors judging that the six other members of the Group would not have any interest to intervene on the markets cause a drop in the Japanese currency.
For many observers, the Japanese exception as regards rate would be all the more difficult to assume that the Federal fund is on the point of reducing new its rates Wednesday and that the ECB as the Bank of England probably will encase the step to him the next week.
The central banks Indian, Chinese, Canadian and Australian inter alia they also softened their policies during the last weeks.
A fall of the Japanese rates is not however yet assured. The Bank of Japan will study the situation of the worldwide markets before making a decision Friday, explained at Reuters the source, which required anonymity. But for the analysts, it would be dangerous to catch on the wrong foot the markets in the current climate.
“BoJ could be driven back to lower the rates in order not to disappoint the market”, thus underlines Akihiko Yokoyama, bond strategist of JPMorgan Securities.
THE PURSE REBOUNDED OF 7,7%
Tokyo Stock Exchange rebounded of 7,7% Wednesday, grace mainly to anticipations of fall of the rates. Tuesday, New York Stock Exchange had finished on a spectacular rise of almost 11%, the rebound being accelerated at the end of the meeting after information on BoJ.
As for the yen, it underwent Tuesday in New York its stronger fall in only one meeting vis-a-vis the dollar since 1974. The markets estimate from now on at 70% the probability of a fall of rate of a quarter of point Friday, against less than 20% Tuesday.
The leaders of BoJ had until now isolated the possibility of such a fall by stressing that the Japanese recession “was imported”, via the decrease in the foreign demand. But the governor associates Kiyohiko Nishimura recognized for its part Wednesday that the economic crisis approached the archipelago.
“There exists a risk to still see worsening the total situation of the markets and economy, which would affect the Japanese economy”, he declared at the Parliament.
Tokyo Stock Exchange lost a third of its capitalization in less than one month, weakening more the large banks of the country, practically saved hitherto by the financial crisis.
On their side, the industrial companies suffer from the rise of the yen, which has recently touched its more high levels for 13 years vis-a-vis the dollar. The industrial production fell of 1,2% over the quarter July-September, its third consecutive fall, of ever seen since 2001, time to which Japan was in recession.
According to Nikkei, BoJ will bring back Friday its growth forecast of the nation's economy very nearly zero for the financial year to at the end of March, against 1,2% until now.
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