Pressure Back on Japan after Pounds 3.6bn Yen Rescue; We Will Take Bold Measures. in Particular, We Will Carry out the Dispos Al of Bad Loans to Stabilise the Financial System and Steps to Increase Domesti C Demand. Japanese Prime Minister Ryutaro Hashimoto
The world took a step back from the threat of global recession yesterday as markets across Asia picked up in the wake of tough US action.
Stocks surged as investors reacted with glee to joint intervention by Tokyo and Washington to strengthen the yen.
Exchanges from Sydney to Seoul registered sharp gains after the US Federal Reserve and the Bank of Japan spent up to pounds 3.6 billion to shore up the yen.
Even the beleaguered Thai market briefly shot up more than 11 per cent.
But now the focus is on Japan to finally sort out its economy and deliver on promised reforms if the improvement is to be sustained.
I as in the past Japan proves to be all words and no action, then it could all unravel again.
For the moment Asian stock markets have roared their approval and, by the close yesterday, Tokyo's Nikkei average had jumped 4.39 per cent to breach the 15,000 level, finishing up 646.16 points at 15,361.54.
Markets in Hong Kong, Seoul, Kuala Lumpur, Manila and Bangkok all saw gains of more than five per cent.
The yen soared against the dollar and its strength boosted other regional currencies.
Hong Kong's Hang Seng index was up 7.4 per cent at one point, ending 6.39 per cent higher at 8515.97, up 511.62 points.
Bangkok's SET index quickly broke the 300 barrier and gained 11.6 per cent but lost ground and ended at 291.46, up 6.79 per cent or 18.52 points on the day.
Sydney's All Ordinaries index closed at 2608.2, up 2.3 per cent or 58.9 points, in its biggest one-day jump since October.
Manila stocks scored their biggest one-day gain in four months. The index ended a seven-day losing streak to close at 1,828.59, up 6.55 per cent or 112 points.
In Taiwan, stocks closed up 4.04 per cent at 7768.31, a gain of 301.93 points.
"One major depressing factor appears to have been eliminated given the United States' will to intervene to support the yen," said broker Mr Yoon Sam-wi.
"Right now there is a turnaround in all world markets. This intervention has been regarded very favourably," said Mr Howard Gorges, a director at South China Brokerage in Hong Kong.
After receiving the strong US vote of confidence in its economic policies Japan sought to prove that it has earned that support.
It was the US and Japan's first joint currency market intervention in six years.
That prompted Japanese officials to indicate they were ready to move aggressively on pledges of economic and financial reform that had been key to winning US support.
"We will take bold measures. In particular, we will carry out the disposal of bad loans to stabilise the financial system and steps to increase domestic demand," said Prime Minister Ryutaro Hashimoto.
He vowed to review tax rates and clean up the country's bad loans mess.
He also called on Japanese to regain their selonfidence and make the nation an economic powerhouse again.
"To spark a rebound in the stalled economy, I will do my best to help to write off bad loans, achieve growth driven by domestic demand, open Japanese markets further and promote deregulation," said Mr Hashimoto. …