Japanese stocks led an Asian surge and the dollar picked up on Monday as Japan’s central bank held an emergency meeting on the yen and the government prepared new measures to boost the ailing economy.
Bank of Japan governor Masaaki Shirakawa returned to Tokyo from the United States a day early Sunday to hold the last-minute gathering amid government pressure on the bank to stem the yen’s rise, which is hurting the nation’s recovery.
Traders began the day on a high after Federal Reserve chief Ben Bernanke reassured the country that he was ready to step in if the US recovery faltered.
The dollar, which hit a 15-year low against the Japanese unit last week, climbed to 85.74 yen in Tokyo morning trade from 85.19 in New York late Friday. The euro rose to 109.23 yen from 108.77.
The weaker yen helped Japan’s exporters, which helped push Tokyo’s Nikkei stock index 3.05 percent higher by the break.
The BoJ, which said the meeting was to “discuss monetary control matters based on recent economic and financial developments”, said Monday it would hold interest rates at 0.1 percent while further easing monetary policy. Prime Minister Naoto Kan said he would meet Shirakawa later Monday to discuss foreign exchange rates and measures to boost the economy.
News of the meeting comes as the government readied a set of measures aimed at boosting the economy, which has been beset by deflation.
Kan said Friday that the government would “implement policy measures that will be immediately effective and have a high potential of creating jobs”.
The prospect of fresh stimulus for the Japanese economy gave a lift to regional markets, with Hong Kong up 0.92 percent, Sydney 1.84 percent higher and Seoul rising 1.47 percent.
Wall Street provided a strong cue, with the Dow jumping 1.65 percent after Bernanke’s comments Friday that the Fed will take more “unconventional” steps to boost growth if the US economic outlook “deteriorated significantly”.
He said pace of recovery and employment was weaker than expected but added that prospects for growth picking up in 2011 appeared to “remain in place”.
“The tone (of Bernanke’s comments) was he would do everything to support the US economy, which potentially implies some quantitative easing,” Hamilton Hindin Greene Broker James Smalley told Dow Jones Newswires in Wellington. He added that the markets had taken the statement “very well and that has flowed through into our market”.
The Fed chief was talking after the government slashed second quarter growth in the world’s largest economy to 1.6 percent, sharply lower than the 2.4 percent projected earlier.
However, it was slightly better than the 1.4 percent forecast by economists.
Oil prices gained, with New York’s main contract, light sweet crude for delivery in October, rising 21 cents to 75.38 dollars a barrel.
Brent North Sea crude for delivery in October advanced 18 cents to 76.83 dollars.
Gold opened at 1,236.50-1,237.50 dollars an ounce, slightly up from Friday’s closing price of 1,236.00-1,237.00 dollars.