Japan will use US$5 billion from its foreign currency reserves to help companies raise funds during a worsening recession in Asia’s largest economy, the finance minister said yesterday.
Tokyo will lend the money to the state-backed Japan Bank for International Cooperation (JBIC) to keep credit flowing, Kaoru Yosano told reporters.
“Taking into account the current severe conditions for those trying to procure foreign funds, we’ve decided to lend foreign currencies [from the reserves] to the JBIC as a temporary, extraordinary measure,” Yosano said.
Toyota Motor Corp’s financial unit said yesterday that it had asked for an emergency loan from a state-backed lender to ride out the financial crisis, with reports putting the sum at close to US$2 billion.
Toyota Financial Services, which provides loans to car buyers, is in consultations with theJBIC, but the size of the loan has not yet been decided, company official Mio Sugito said.
“The move is aimed at diversifying our financial resources as the international financial market is getting tighter, especially in the United States,” Sugito said.
The Nikkei Shimbun and the Jiji Press news agency reported that Toyota’s wholly owned financial subsidiary is asking for about ¥200 billion (US$2 billion), without citing sources.
If the loan is realized, it will be JBIC’s first to a Japanese automaker under a new government scheme, the reports said.
Japan’s reserves are worth more than US$1 trillion, the second-largest in the world after those of China.
The government has already announced a series of steps to stimulate the economy, including a plan to hand ¥2 trillion back to the public to kick-start consumer spending.
Japan said last week that it had started work on an emergency plan to halt a plunge in share prices that Tokyo fears could deepen the recession in Asia’s biggest economy. It did not say what form any action might take.
The government is reportedly considering using public funds to purchase stocks and other assets directly from the market to prop up prices.
The Nikkei stock index has fallen more than 18 percent this year, approaching levels last seen in 1982, after a record 42 percent plunge last year.
Japan is concerned that its banks, which have big investments in the stock market, will scale back lending as a result of the financial turmoil.
Yosano said that excessive falls in share prices could not be ignored, as the Nikkei slid near to a fresh 26-year low.
“We shall calmly monitor the movement. But we cannot overlook excessively large falls,” said Yosano, who is also the economics minister.
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