The Japanese yen is accelerating against several currencies on Tuesday as the central bank announced that it plans to help stabilize financial markets that have been decimated by the coronavirus. With an already fragile economy on the brink of a recession, the Bank of Japan (BoJ) aims to offer liquidity to ensure Covid-19 does not do any more damage to a country that is scheduled to host the Olympic Games in Tokyo. The announcement was not enough to lift the leading stock index.
On Monday, BoJ Governor Haruhiko Kuroda issued a statement that confirmed the central bank âwill closely monitor future developments, and will strive to provide ample liquidity and ensure stability in financial markets through appropriate market operations and asset purchases.â The statement came soon after the BoJ published plans to acquire tens of billions of dollarsâ worth of government bonds and other assets to continue extending cheap credit to borrowers and fend off deflation in the coming weeks.
While the situation has somewhat moderated in China, Japan keeps reporting new infections. The latest number of confirmed cases is nearing 1,000 and 12 people have died. Health authorities are concerned that Covid-19 is spreading throughout the worldâs third-largest economy, especially after nine government officials were confirmed to have contracted the coronavirus.
Meanwhile, the G7 officials announced that they will unite to battle the coronavirus crisis, but leaders stopped short of listing the policy tools they will employ. The G7 said in a statement:
Given the potential impacts of COVID-19 on global growth, we reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks.
On the data front, Tokyo reported that year-over-year capital spending tumbled 3.5% in the fourth quarter. The Jibun Bank manufacturing purchasing managersâ index (PMI) slumped from 48.8 in January to 47.8 in February. February consumer confidence fell again to 38.4.
In other news, Japanâs Olympics minister announced that the Tokyo Games could be delayed after July 24. Seiko Hashimoto noted that the summer event could take place later in the year until the coronavirus subsides.
The USD/JPY currency pair fell 0.6% to 107.68, from an opening of 108.33, at 12:45 GMT on Tuesday. The EUR/JPY declined 0.68% to 119.78, from an opening of 120.61.
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