Japan Announces Stimulus Package

In early September, we reported that the Japanese government was considering a billion-dollar stimulus package to ease citizen relief from high food and fuel prices, as well as keep the Japanese economy afloat. The stimulus package is now official, and at 27 trillion yen ($275 billion), it’s a significant move to help the world’s number two economy survive “a financial disaster,” as Prime Minister Taro Aso called the global financial crisis.

Included in the stimulus package’s provisions are extended credits for small businesses and cash paybacks to Japanese households. Although the Japanese economy is thought to be relatively stable in comparison to the U.S. and Europe, concerns about the nation’s health still linger. Industrial output has fallen for the third straight quarter, and the high yen value has proved detrimental for Japanese exporters, whose products have become too expensive for key importers in the U.S.

As the yen has appreciated in forex trade, the Nikkei has remained low, down 32% in 2008 and 24% in October alone. This is a combination which points to the tremulous condition of the financial market. “Foreign exchange markets remain very jittery. Once again, the strongest performers in the last 24 hours have been the dollar, Swiss franc and most of all, the yen,” ING forex strategist Tom Levinson told Reuters. “So it’s still very much a case of safe-haven, low-yielding currencies performing more strongly.”