TOKYO, March 14 (UPI) -- Japan's central bank stood ready Monday to pump mountainous amounts of cash to restore confidence as markets trembled over last week's natural disasters.
The Bank of Japan announced it will provide a record 18 trillion yen, or about $220 billion, to lending institutions such as banks so they can offer short-term loans to one another and also provide loans to those in need in the wake of last week's 9-magnitude earthquake and tsunami tidal waves that killed or left missing thousands of people in northeastern Japan. The disaster left much of the region's buildings, including homes, either in ruins or washed away into the Pacific Ocean.
The Bank of Japan said it would maintain its lending rate at zero to 0.1 percent.
The central bank's actions are designed to prevent a shortage of capital that would cause interest rates to rise and possibly derail the country's fragile economic recovery following years of deflation.
The bank injected 15 trillion of its 18 trillion yen program Monday with the rest to come Wednesday, Kyodo News reported.
The bank said it "will continue to get a grip on the situation in financial markets and the operations of financial institutions, and stands ready to respond and act as necessary."
The bank's action came on the same day when Japan's benchmark Nikkei-225 stock index plunged nearly 6 percent upon opening Monday, the first day of full trading after last Friday's catastrophe, before recovering as the day progressed.
Other Asian markets also opened lower Monday.
The quake-tsunami invasion also disabled nuclear power plants in their path, raising concerns about reactor meltdowns and radioactivity spread besides power cuts even in places such as Tokyo.
Nikkei.com warned Japanese manufacturers, some already facing disruption to their operations from Friday's disaster, would now have to confront rolling blackouts starting Monday in greater Tokyo.
Many manufacturers, including Toyota Motor Corp. and Nissan Motor Co., remained closed Monday as they assessed damage and faced of power shortages at their domestic factories.
The magnitude of the calamity already seen in the speedily rising death toll was only beginning to be gauged in economic terms.
However, CNNMoney.com warned the disaster could become the most expensive quake in history.
The report quoted a preliminary estimate by a catastrophe modeling firm that losses from the quake and tsunami and the fires which they set off would be at least $100 billion. AIR Worldwide Corp., a Boston risk consultant, said the cost of the earthquake alone would likely be as high as $35 billion.
Britain's Guardian said the blackouts and closures could threaten another recession as more plants and factories close across the country.
"The Bank of Japan, I am sure, will be on high alert, doing everything in its power to stop the yen becoming too strong, as well as providing the banking sector with all the liquidity it may require," one expert told the newspaper.
The high rebuilding costs that Japan would need to incur come at a time when the country is already bogged down by the world's highest public debt.
The New York Times said the damaged nuclear plants threatened to further tighten energy situation which could hit all sectors of the economy.
"The big question is whether this will seriously affect Japan's ability to produce goods for any extended period of time," Edward Yardeni, an independent economist and investment strategist, told The Times.
|Additional Business News Stories|
NEW DELHI, May 20 (UPI) --The US Department of Energy's conditional approval a Texas liquefied natural gas terminal to export to nations that do not have a free trade agreement with the United States is seen as a potential boost for India's energy security.
RIO DE JANEIRO, May 20 (UPI) --Sweden's Saab is upgrading its bid for Brazil's FX-2 jet fighter purchase plan, even as it weighs challenges from rivals Boeing and France's Dassault.