The G7 club of rich nations pledged yesterday to cooperate to bring stability to battered global markets, where stocks buckled on fears government action will be too late to prevent a worldwide recession.
It came hours after the IMF announced rescue plans for Ukraine and Hungary, two nations hit hard by the financial crisis that is wreaking havoc on world markets.
Japan’s Nikkei stock index fell briefly yesterday to a level last seen in 1982 prior to the economic bubble era before bouncing back, while most other markets in Asia also posted losses in early trade.
The G7 — comprising Britain, Canada, France, Germany, Italy, Japan and the US — sought to calm nerves by affirming their “shared interest in a strong and stable international financial system.”
“We continue to monitor markets closely and cooperate as appropriate,” the statement from their finance ministers and central bank chiefs said.
At the same time, they voiced concern about “excessive volatility” in the value of the yen, which on Friday soared to a 13-year high against the dollar as worried investors unwound positions in the Japanese currency.
On Sunday, the IMF said it would lend US$16.5 billion to Ukraine and would announce a “substantial” package for Hungary in the next few days.
The deals, made public by IMF director Dominique Strauss-Kahn, followed a US$2.1 billion loan to Iceland and came amid appeals for assistance from other countries including Belarus and Pakistan.
The Washington-based institution has said it can provide up to US$200 billion in loans to countries facing financial difficulties.
The Ukraine program “is focused on the essential upfront measures needed to maintain confidence and economic and financial stability,” Strauss-Kahn’s statement said.
“The policies Hungary envisages justify an exceptional level of access to Fund resources,” he said, adding the package would include contributions from the IMF, European governments and other partners.
South Korea meanwhile announced its biggest-ever interest rate cut — the Bank of Korea reducing its key rate by 75 basis points to 4.25 percent — and said it would push for big tax cuts and spending increases to better protect its export-driven economy from falling global demand.
South Korean President Lee Myung-bak insisted the nation would not face a repeat of the 1997-1998 financial crisis after the local stock market last week suffered its biggest weekly decline and the won plunged to a 10-year low.
Japanese Prime Minister Taro Aso announced fresh measures to support the stock market, including boosting a government fund to pump capital into banks if needed.
Aso said Japan would also tighten restrictions on short-selling — selling shares in order to profit later from an anticipated fall in prices.
He did not specify the amount of new money to inject into banks but Kaoru Yosano, the economic and fiscal policy minister, said on Sunday that Japan would likely increase it from two to ¥10 trillion (US$110 billion).
After initially falling, the Nikkei index rebounded to show a gain of 0.4 percent by lunch. The bourse has fallen around 50 percent this year and is 80 percent off its all-time high, reached in December 1989.
South Korea’s KOSPI index was down four percent by midday, after program trading was halted for five minutes because of the sharp fall.
Elsewhere, Shanghai shed 2.3 percent, Sydney was down 1.35 by midday while Hong Kong ended the morning down 4.2 percent.
Philippine shares closed down 12.3 percent and Indonesian shares were off 6 percent.
US and European markets had already suffered heavy losses on Friday, with Wall Street’s Dow Jones index ending down 3.59 percent. Investors are braced for further turbulence this week.
Although the US Federal Reserve is expected to cut interest rates on Wednesday from 1.5 percent, Thursday also sees the release of US GDP figures for the third quarter which are likely to show a decline.
Other key indicators on both sides of the Atlantic and a flood of results and outlooks from US, European and Japanese companies are unlikely to add grounds for optimism.
US President Donald Trump yesterday announced sweeping "reciprocal tariffs" on US trading partners, including a 32 percent tax on goods from Taiwan that is set to take effect on Wednesday. At a Rose Garden event, Trump declared a 10 percent baseline tax on imports from all countries, with the White House saying it would take effect on Saturday. Countries with larger trade surpluses with the US would face higher duties beginning on Wednesday, including Taiwan (32 percent), China (34 percent), Japan (24 percent), South Korea (25 percent), Vietnam (46 percent) and Thailand (36 percent). Canada and Mexico, the two largest US trading
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
China's military today said it began joint army, navy and rocket force exercises around Taiwan to "serve as a stern warning and powerful deterrent against Taiwanese independence," calling President William Lai (賴清德) a "parasite." The exercises come after Lai called Beijing a "foreign hostile force" last month. More than 10 Chinese military ships approached close to Taiwan's 24 nautical mile (44.4km) contiguous zone this morning and Taiwan sent its own warships to respond, two senior Taiwanese officials said. Taiwan has not yet detected any live fire by the Chinese military so far, one of the officials said. The drills took place after US Secretary
RSS