Japan PM concerned on Brexit impact on markets

Japanese Finance Minister Taro Aso said Prime Minister Shinzo Abe had instructed him to cooperate with the Bank of Japan and closely consult with Group of Seven partners, in responding to market moves following Britain’s vote to leave the European Union.

The government will monitor the situation “more than ever” and steadily take steps when needed so that volatile movements do not continue, Xinhua quoted Aso as saying.

“Stability in global financial markets, including currency markets, is necessary”, Abe said in a stump speech in the northern Japanese city of Ichinoseki after Britain appeared to have voted to exit the EU.

Banks might refuse to lend to each other for fear of a deterioration of creditworthiness in the wake of a Brexit.

The prospect of global financial-market upheaval over Britain leaving the European Union has upset currency markets around the globe.

The statement will reconfirm an agreement among G-7 nations that “excess volatility and disorderly currency moves are undesirable”, one of the officials said. “What is needed is global cooperation”. He said that this could be done through the existing swap arrangements it had with other central banks.

In contrast the Japanese yen – a safe haven currency – soared, touching 100 yen against one unit of the United States dollar.

The yen’s sharp appreciation and slumping Tokyo stocks will add pressure on the BOJ to expand monetary stimulus, possibly at an emergency meeting before a scheduled rate review next month.

“The BOJ will keep in close contact with the relevant authorities in Japan and overseas and keep a close watch on the impact the result of the referendum will have on the global financial markets”, Kuroda said.

Aso’s statement would be similar to one the Finance Ministry issued past year, when it said it would watch market moves carefully and work closely with the Bank of Japan to deal with any market turmoil, they said.

A summary of discussions at the BOJ’s June rate review showed on Friday that central bank policymakers were deeply divided on whether to top up or taper its massive asset-buying program.