Japan can withstand US subprime fallout - finance minister |
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Wed, 15 Aug 2007 10:56
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TOKYO (Thomson Financial) - Japan's economy can withstand the fallout from the US mortgage problems, the government said Wednesday, seeking to calm investor nerves after recent havoc on global markets.Finance Minister Koji Omi expressed hope that the worst of the recent turbulence caused by problems in risky US subprime loans is over, even as Japanese share prices suffered another heavy sell-off.'With the Japanese, US and European central banks responding quickly (to the subprime troubles), there is an impression that overall we have turned the corner,' Omi told reporters.The subprime woes 'will not have a serious influence' on Japan's financial sector, Omi said.'But we will continue to pay careful attention from now on,' he said.Central banks have pumped billions of US dollars into money markets in recent days to try to avert a credit squeeze.Investors, however, remained extremely jittery.Tokyo's Nikkei-225 index of leading shares tumbled 369.00 points or 2.2 percent on Wednesday to 16,475.61, the worst close since December 8, 2006.Despite the slump, Japan's economic recovery remains intact, Prime Minister Shinzo Abe said.'I believe the Japanese economy remains strong. But we will have to continue to carefully monitor the situation,' he told reporters.Economic and Fiscal Policy Minister Hiroko Ota also sought to reassure skittish markets, saying the US mortgage problems' 'influence on the actual economy is not that large.'One concern is that if the US economy slows sharply then Japanese exports will be hit, which could in turn undermine overall economic growth.A stronger yen could also affect exports, after the Japanese currency shot up to four-month highs against the euro and the dollar as dealers unwound risky carry trades that take advantage of Japan's low interest rates.Japan's economy grew at a tepid 0.5 percent annualised pace in the second quarter of 2007, slowing sharply as exports and consumer spending lost steam.afp/jgmb/jgCOPYRIGHTCopyright AFX News Limited 2007. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
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