TOKYO (AP) — Japan’s central bank said Friday it will provide some 30 trillion yen ($280 billion) to banks for financing small and medium-size businesses battling economic hardships brought on by the coronavrius pandemic.
The Bank of Japan will start providing funding to the banks in June, it said. The offer for zero-interest and unsecured loans comes on top of earlier measures, such as 20 trillion yen ($187 billion) for purchasing corporate bonds and commercial papers.
The Bank of Japan has also announced 25 trillion yen ($234 billion) financing for private debt.
The world’s third-largest economy has sunk into recession, battling stagnant consumption, dwindled tourism and plunging exports.
Central banks around the world, including the U.S. Federal Reserve, have been making similar moves.
The Bank of Japan’s policy board decided unanimously to continue all measures through March next year.
The bank has sought to send a message of financial stability by lifting the ceiling on the purchase of government bonds to maintain financial fluidity.
It said it will continue to monitor the COVID-19 situation and carry out additional measures, if needed.
“There is little doubt that the BoJ will maintain an unequivocally dovish stance,” said Hayaki Narita of Mizuho Bank.
Narita said Japan is facing “a triple whammy of negative demand shock,” on top of the outbreak, the postponement of the 2020 Tokyo Olympics until next year, a recent tax raise and trade tensions between the U.S. and China, Japan’s main trading partners.
Japan’s long-term interest rates are already at zero. The short-term interest rate is negative 0.1%.
A state of emergency requesting people stay home and work remotely has been lifted in most of the nation, though it remains in place in Tokyo.
Dozens of bankruptcies have been reported as a result of the virus outbreak. But the unemployment rate, although rising slightly, has not shot up so far, unlike the U.S. and some other nations.
Japan has long suffered a labor shortage. Major Japanese companies tend to offer “lifetime employment” in principle and do not resort to layoffs as easily as their Western counterparts. But analysts have said tough times lie ahead.
Yuri Kageyama is on Twitter https://twitter.com/yurikageyama
5 Oil Stocks That May Not Survive the Current Crisis
What would you think of the long-term prospects of a business that paid you to buy their products? That’s an oversimplification of what occurred to the May futures contract for oil on April 20. The price for that contract sold for a negative price for the first time in history.
The crisis befalling the oil companies at this time can best be described as “only the strongest survive.” There’s just no way the oil companies can possibly handle month after month of rock-bottom oil prices.
The problem is almost comically simple to understand. There is a massively reduced demand for oil as millions of Americans are following mitigation orders ranging from social distancing guidelines to more restrictive shelter in place orders. At the same time, the market is trying to absorb the oversupply of oil that came from Russia and Saudi Arabia.
However, when the year started, things looked like it might be business as usual for oil producers. The U.S. economy was humming along and there was talk that the second half of the year might finally bring the boost to oil prices that many companies badly needed.
However, since the middle of February, the bottom has dropped out of the market in general, and oil prices have been one of the main sectors to feel the impact.
Initially, investors tried to remain optimistic. A month ago, investors thought that the economy might be reopening sooner rather than later. However, the exact timing of the reopening is about as fluid as a barrel of oil. And with it looking more likely that there will be more demand destruction at least through May, there’s very little to prop up the stock of any oil companies.
And that means that, in all likelihood, there will not be room left for some oil companies. We’ve highlighted five oil stocks that have a strong probability of not surviving the chaos surrounding the coronavirus and our nation’s response.
View the “5 Oil Stocks That May Not Survive the Current Crisis”.
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