Japan to use forex reserves to fight credit crunch
Japan said yesterday it would use five billion dollars from its currency reserves to help companies raise funds as auto giant Toyota Motor asked the government for financial aid.
Tokyo's decision to dip into its one-trillion-dollar forex reserves underscores growing fears that a funding squeeze is deepening the country's worst recession in decades.
Finance Minister Kaoru Yosano described the move as an "extraordinary measure" in response to severe market conditions.
He said the government was also ready to use all means to tackle stock market swings, which could have a "devastating impact" on the economy.
Companies looking to borrow public funds through the state-backed Japan Bank for International Cooperation (JBIC) include Toyota Motor Corp.'s financial unit, which is reportedly seeking about two billion dollars.
Toyota Financial Services, which provides loans to car buyers, is in consultations with JBIC but the size of the loan has not been decided, company official Mio Sugito said.
"The international financial market is getting tighter, especially in the United States," Sugito said.
JBIC's main role is to invest in projects in developing countries, but the government in December decided as an emergency measure to allow the bank to lend to Japanese companies operating in developed countries.
The move comes amid concerns that firms are finding it increasingly hard to raise funds from distressed markets and cash-strapped banks.
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