Japan May Spend Extra $52 Billion to Cope With Yen Gains, Documents Show

[Letsbereal]

Japan May Spend Extra $52 Billion to Cope With Yen Gains, Documents Show
20 October 2011, by Kyoko Shimodoi and Toru Fujioka (Bloomberg)
http://www.bloomberg.com/news/2011-10-20/japan-may-spend-26-billion-countering-yen-pain-document-shows.html

Excerpt:

Japan is preparing to unveil plans to spend an extra 4 trillion yen ($52 billion) to help its exporters cope with a surging yen and spur job creation, according to documents obtained by Bloomberg News.

The government will add 2 trillion yen to the 8 trillion yen in foreign-exchange reserves being shifted to the state-run Japan Bank for International Cooperation to aid exporters and spur acquisitions overseas, one document shows. A further 2 trillion yen will be allocated to encourage investment in domestic plants and to hire workers, according to another document obtained from two government officials who declined to be identified because the plan isn’t public.

A yen appreciation of almost 6% this year has prompted the government to adopt a multi-pronged approach to currency policy. While threatening intervention, Japanese authorities have offered aid to companies hit by the yen’s move and highlighted the lower cost of making overseas acquisitions. Japan imports about 80 percent of its energy needs.

“The government realizes the need to alleviate the pain from the continuing strong yen but the damage has already been done,” said Takeshi Minami, chief economist in Tokyo at Norinchukin Research Institute Co. “They should consider ways to stop the strong yen, and that would require more cooperation from the Bank of Japan.”

[Letsbereal]

Japan to Sell $10.4 Billion More Debt to Pay for Earthquake Reconstruction
21 October 2011, by Yumi Ikeda, Monami Yui and Toru Fujioka (Bloomberg)
http://www.bloomberg.com/news/2011-10-21/japan-to-sell-800-billion-yen-more-debt.html

Excerpt:

Japan will sell about 800 billion yen ($10.4 billion) of additional government debt to the market this fiscal year to fund earthquake reconstruction and help companies cope with a strong yen, the Ministry of Finance said.

The total for investors such as banks and life insurers will be a record 145.7 trillion yen, compared with an initial plan for the year started April 1 of 144.9 trillion yen.

The amount announced today was below predictions from analysts at UBS AG, Mizuho Securities Co. and Nomura Securities Co. as the government seeks to control the biggest debt burden in the industrialized world. Policy makers aim to drive an economic recovery after three-consecutive quarters of contraction and the March 11 quake and tsunami that left more than 19,000 people dead or missing.

“The issuance plan gave a positive surprise to the bond market,” said Katsutoshi Inadome, a fixed-income strategist in Tokyo at Mitsubishi UFJ Morgan Stanley Securities Co., one of the 25 primary dealers obliged to bid at government debt sales. “Though the additional issuance is small, that doesn’t mean Japan’s overall financial burden is small, which is the bigger issue.”

Prime Minister Yoshihiko Noda approved today a 12.1 trillion yen third supplementary budget to fund rebuilding. The package will include 2 trillion yen to help companies deal with the yen’s appreciation. The government has already unveiled two packages totaling 6 trillion yen for quake relief.