The Japanese yen is gaining against its biggest currency competitors to kick off the trading week as the nation braces for details surrounding the governmentâs âboldest-everâ stimulus package. Japanâs economic situation had been bearish prior to the coronavirus pandemic, but the outbreak has negatively affected the worldâs third-largest economy. With the Tokyo Olympic Games postponed until the end of July, it is unclear how Japan can avoid slipping into a recession.
Speaking at a press conference over the weekend, Prime Minister Japanese yen promised that his government is putting together the pieces of an extra budget for the fiscal year 2020 to pay for the measures. The rescue package is expected to top the $526 billion emergency bailout in 2008.
So, what can the country anticipate from the prime minister? According to Abe, the legislation will include cash handouts to eligible households, potentially lower tax rates, no-interest loans to small- and medium-sized businesses, and wage subsidies for companies maintaining employment levels.
We will draw up the boldest-ever package by using all policy tools, such as reducing or exempting tax payments and extending financial assistance.
I have to say that people need to brace for a battle (against the coronavirus) that could be prolonged. At this point, we don’t need to declare a state of emergency…but we are still facing a critical moment.
This would be in addition to the two previous emergency packages in response to COVID-19. The first was a $93 million cash injection and another $3.7 billion in outlays to shore up the national economy.
Last week, it was confirmed that the Tokyo Olympics would be postponed amid the virus outbreak. On Monday, it was announced that the event would take place from July 23 to August 5, and the Paralympics would be rescheduled for August 24 to September 5.
The Tokyo organizing committee stopped short of saying how much a delay would cost taxpayers, but experts project that the postponement could trigger a $4 billion loss. Japan is officially spending $12.6 billion in taxpayer money to host the Olympics.
Meanwhile, Japan is bracing for a tidal wave of economic data on Tuesday. The February data will cover retail sales, the unemployment rate, housing, manufacturing, and industrial production. Analystsâ forecasts are generally bearish, but they say the best figures to determine how much Japan has been affected by the coronavirus will come in March.
According to a new study by the Japan Center for Economic Research (JCER), 90% of the nation’s top private-sector economists say the economy is contracting.
The USD/JPY currency pair tumbled 0.05% to 107.89, from an opening of 107.92, at 13:27 GMT on Monday. The EUR/JPY fell 0.99% to 119.04, from an opening of 120.52.
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