Japan sprays more cash over jittery markets

People queue up in front of a gas station in Mito, north of Tokyo Wednesday morning, March 16, 2011, following Friday's massive earthquake and tsunami. (AP Photo/Kyodo News) JAPAN OUT, MANDATORY CREDIT, NO LICENSING IN CHINA, HONG KONG, JAPAN, SOUTH KOREA AND FRANCE
People queue up in front of a gas station in Mito, north of Tokyo Wednesday morning, March 16, 2011, following Friday's massive earthquake and tsunami. (AP Photo/Kyodo News) JAPAN OUT, MANDATORY CREDIT, NO LICENSING IN CHINA, HONG KONG, JAPAN, SOUTH KOREA AND FRANCE (AP)
By TOMOKO A. HOSAKA
The Associated Press
Thursday, March 17, 2011; 2:10 AM

TOKYO -- Japan's central bank sprayed more cash over jittery money markets Thursday as ATMs at a major bank suffered a two and a half hour outage nationwide and the yen shot to a record high.

The Bank of Japan injected an additional 6 trillion yen ($76.7 billion) in same-day funds after the dollar hit 76.25 yen in the morning - an all-time low in the aftermath of Friday's 9.0 magnitude quake and tsunami that killed thousands and triggered an unfolding nuclear crisis. With same-day funds, banks in need can access cash immediately.

Mizuho Bank, Japan's third biggest lender, couldn't immediately explain the failure of its 5,600 automatic cash dispensing machines, adding to already rattled nerves. The machines were operating again by midday after going offline at about 9 a.m.

Driving the yen to unprecedented highs were predictions that big Japanese investors like insurance companies would repatriate funds from overseas en masse to cover the cost of tsunami damage to northeastern Japan, said Masafumi Yamamoto, chief foreign exchange strategist at Barclays Capital in Tokyo.

The repatriation hasn't happened yet, so the volatility is "highly speculative," he said. The market is now betting that the finance ministry and Bank of Japan will intervene to sell the dollar and weaken the yen. A strong yen hurts Japan's exporters, potentially deepening the already severe hit to the world's No. 3 economy from the multiple disasters.

The latest offer of central bank funding came as stock markets turned south again. The Nikkei 225 stock average was down 0.9 percent at 9,017.87 after plunging on Monday and Tuesday before partly recovering on Wednesday.

The Bank of Japan conducted emergency operations for the fourth day in a row, adding to the 55.6 trillion ($688 billion) it provided money markets the previous three days. Of that figure, 28 trillion yen were same-day funds.

By flooding the banking system with money, it hopes banks will continue lending and meet the expected surge in the demand for post-disaster funds.

Financial markets nervously monitored the rapidly changing situation at a crippled nuclear power plant in the northeast. On Thursday, Japanese military helicopters dumped loads of seawater onto the plant, trying to cool dangerously overheated uranium fuel rods that may be on the verge of spewing more radiation into the atmosphere.

The nuclear crisis has triggered international alarm and partly overshadowed the human tragedy caused by Friday's quake.

Australia, Britain and Germany advised their citizens in Japan to consider leaving Tokyo and earthquake-affected areas, joining a growing number of governments and businesses telling their people it may be safer elsewhere.

Around the country, people queued for fuel and emptied supermarket shelves of food and other necessities.

Analysts at Goldman Sachs estimated disaster losses could reach $200 billion, which is more than 3 percent of Japan's gross domestic product.

Kyohei Morita, chief economist at Barclays Capital Japan, estimates losses of about 15 trillion yen ($186 billion) based on currently available information.

"The latest earthquake is expected to inflict more human and physical damage" than the Kobe quake in 1995, Morita said in a report.

The hardest hit prefectures (states) - Iwate, Miyagi, Fukushima and Ibaraki - represent about 7 percent of Japan's economy.

The region is home to steel plants, oil refineries, nuclear power plants and factories making parts for cars and electronics. Roads and other transport networks are crippled, while power supplies are constrained.

"The local automotive industry is facing acute and unprecedented problems relating to component and power supply shortages," said Tim Urquhart, an analyst with IHS Global Insight.


© 2011 The Associated Press