Yen slides as Japan feels the heat
JAPAN'S currency posted a fresh three-year low for a third successive day as the country's top bankers met to discuss what they could do to dig the recession-hit economy out of its slump.
Fresh pressure on the yen - which fell as low as 128.44 against the dollar, its lowest since October 1998 - came from Finance Minister Masajuro Shiokawa, who urged the Bank of Japan to flood the economy with more money. Extra liquidity, he said, would help firms square their books at year-end. A lack of funds could trigger bankruptcies.
Economists predicted a 50-50 chance that the BoJ would ease monetary policy when its two-day meeting winds up on Wednesday. But with interest rates already effectively at zero, it has little room for manoeuvre.
'There is so much political pressure, I think there is a chance the BoJ will do something,' said Tomohiro Noda, senior economist at Industrial Bank of Japan. The central bank's options include buying more government bonds and increasing bank reserves.
Japan is in its fourth recession in a decade. The Organisation for Economic Co-operation and Development has forecast that the economy will shrink by 1% in 2002, that retail prices will fall by 1.4% and that unemployment will rise to a record 5.5%.
