Bank of Japan strengthens stimulus as coronavirus threatens to cause recession
The Bank of Japan has said today it would buy 200bn yen (£1.49bn) of Japanese government bonds with five to ten years maturity.
It is an unscheduled move that has come about after the local debt market capitulated as investors rushed for liquidity.
Japan’s central bank also said it would inject an extra 1.5 trillion yen in two-week lending.
It is the latest sign of alarm as Japan’s liquidity in financial market continues to fall.
The country’s economy had been suffering prior to the coronavirus outbreak that has now left Japan on the brink of recession.
Japan’s economy had shrank at its fastest rate in five years at the end of 2019, with GDP falling 6.3 per cent in October to December.
The country was hit by a sales tax rise and Typhoon Hagibis in October which dampened global demand for goods.
Meanwhile, China’s trade war with the US also took its toll as exports and capital spending fell.
And the coronavirus outbreak has now raised concerns that the economic slowdown could drag on into the first quarter of 2020 and push Japan into recession.
The Nikkei 225 was down 6.08 per cent on Friday, or 1,128.58 points, to end the week on 17,729.66.