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$247 billion to rescue Japanese economy


5:30 AM Tuesday Mar 15, 2011
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The Bank of Japan poured a record 15 trillion ($247 billion) into the world's third-biggest economyas the strongest earthquake in the nation's history triggered a plunge in stocks and a surge in credit risk.

The yen fell after the central bank added funds to the financial system, and bankgovernor Masaaki Shirakawa said he is ready to unleash "massive" liquidity to support markets.

The bank last night expanded an asset buying fund by 5 trillion to 40 trillion as a step to supportbusinesses.

The nine-member policy board also voted unanimously to keep its key interest rate at virtually zero.

Japanese stocks fell 6.2 per cent as car makers, electronics companies and oil refinersclosed to deal with severely damaged infrastructure.

Fears Japan could be driven into recession pushed oil prices in Asia to near US$99 a barrel - down more than US$3 since the quake on Friday."This disaster has in effect temporarily frozen the world's third largest economy," said Richard Soultanian of NUS Consulting.

"It seems clear that Japan's appetite for crude oil may be diminishedin the near-term which should provide previously unforeseen slack in international oil markets."


Besides the 15 trillion yen of emergency funds deployed in the central bank's biggest one-dayoperation, the Bank of Japan offered to buy 3 trillion of government bonds from lenders in repurchase agreements starting tomorrow.

"We are providing as much funds as needed to dispel anxiety infinancial markets," said Kazushige Kamiyama, an official in charge of the central bank's money market operations. "We will continue to add ample funds to stabilise financial markets."

The disaster mayhave killed 10,000 people in Miyagi prefecture north of Tokyo, said a spokesman for the prefectural police department. The official toll reached 1597, with 1481 more missing and 1683 injured.

The...