TOKYO, March 14 (Reuters) - Japanese policymakers on
Tuesday played down the risk of the economy taking a hit from
the collapse of U.S. lender Silicon Valley Bank , even
as fears of a contagion hit financial stocks and sent domestic
share prices tumbling.
Speaking at a regular news conference, Economy Minister
Shigeyuki Goto said the government was closely watching for any
potential fallout on Japan's economy, but did not expect a major
impact from the U.S. lender's collapse for now.
Finance Minister Shunichi Suzuki echoed the view, saying he
saw the possibility of Japan's financial system being jolted by
Silicon Valley Bank's collapse as small.
"We're seeing some risk-aversive moves in the market. But
Japan's financial system is stable," Suzuki said at a separate
news conference.
Japanese financial shares on Tuesday were set for their
biggest plunge since the onset of the COVID-19 pandemic, as
investors focused on the potential risk to commercial banks from
their huge U.S. Treasury holdings.
The drop in bank shares, as well as a rise in the safe-haven
yen, sent the Nikkei average down by around 2%, hitting
Japanese firms weeks before they close their books on March 31.
The market turbulence also comes ahead of a leadership
transition at the Bank of Japan (BOJ) with all eyes on how soon
the new governor, Kazuo Ueda, will dial back its massive
stimulus once he takes office next month.
Many analysts had expected the BOJ would end or phase out
its bond yield curve control (YCC) policy this year, as rising
inflation and global interest rates have triggered market
attacks on a 0.50% cap set for the 10-year Japanese government
bond (JGB) yield.
But with safe-haven demand for JGBs pushing the 10-year
yield down to 0.24%, the BOJ may see little rush in tweaking the
YCC policy, some analysts say.
"JGB yields are now off their highs, which gives the BOJ
some time to contemplate how best to tweak YCC," said Nobuyasu
Atago, a former BOJ official who is now chief economist at
Japan's Ichiyoshi Securities.
"But that doesn't mean the BOJ can sit idle for too long. If
U.S. growth cools, that would hurt Japan's economy and force the
BOJ to come up with means to ramp up stimulus," he said. "That's
pretty difficult given rates are stuck at zero in Japan."
(Reporting by Leika Kihara; Additional reporting by Tetsushi
Kajimoto and Yoshifumi Takemoto; Editing by Jamie Freed)
Messaging: leika.kihara.reuters.com@reuters.net))
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