Bank of Japan acceppts foreigen sovereign bonds as collateral for cash...

Discussion in 'Economics' started by ASusilovic, May 22, 2009.

  1. May 22 (Bloomberg) -- The Bank of Japan raised its view of the economy for the first time in almost three years on signs that a record contraction in the first quarter represented the worst of the recession.

    “Economic conditions have been deteriorating, but exports and production are beginning to level out,” the bank said in a statement in Tokyo today. Previously it said the world’s second-largest economy had “deteriorated significantly.”

    The central bank also decided to accept foreign currency- denominated sovereign bonds as collateral to make it easier for lenders to get cash. The first upgrade in the economic assessment since July 2006 indicates Governor Masaaki Shirakawa and his board may be reluctant to further expand a program of buying corporate and government debt, even as deflation looms.

    “The upgrade of the economic assessment simply came as an endorsement to the recent set of data which had already signaled signs of a bottoming out,” said Izuru Kato, chief economist at Totan Research Institute Ltd. in Tokyo. Adding foreign currency-denominated debt as collateral should be taken as “one of many other tools for a rainy day,” Kato said.

    The yen traded at 94.18 per dollar at 12:57 p.m. from 94.23 before the announcement and close to a nine-week high of 93.87 reached earlier today.

    The central bank said “the pace of deterioration in economic conditions is likely to moderate gradually, leading to a leveling out of the economy.”

    Hum...does that mean UK "negative watch" gilts, too:confused: :D
  2. I am puzzled by the news reports of a "UK negative watch". I interpret Gilt future contract prices to be in an upward trend and British Pound future contract prices might be changing to upward trend. I associate such currency and Gilt price behavior as evidence of a growing economy. Graphs are attached.