Japan Eyes Intervention, Credit Easing in Event of Iraq War

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Last updated at: (Beijing Time) Saturday, March 08, 2003

Japan Eyes Intervention, Credit Easing in Event of Iraq War

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Japan has drawn up an outline of emergency economic steps to be taken in the event of a war in Iraq, which lists intervention in the currency market and an easing of monetary policy, Kyodo News reported Friday.

The government drew up the plan with the aim of preventing confusion in Japan's ailing economy, which could be dealt a heavy blow by a US-led military attack on Iraq, according to the Kyodo.

Under the plan, the government will strengthen monitoring of the stock and foreign exchange markets in cooperation with the Bank of Japan (BOJ) and its Group of Seven (G-7) partners once a war breaks out.

Yen-selling, dollar-buying operations in the currency market tosupport the dollar, which has been on a weakening trend, as well as monetary easing are some of the steps expected to be taken if necessary, Kyodo said.

The government will also consider releasing its oil reserves tofight a major oil price surge, according to the news agency.

In the event of a war, the BOJ is expected to issue a statementto try to allay worries in the financial markets, and provide ample liquidity, the sources said.

If there is an extreme deterioration of market sentiment or if the war appears set to continue for some time, the government willconsider compiling a supplementary budget or reducing taxes to support the economy, Kyodo said.

The emergency plan also includes measures such as securing safety for Japanese in areas around Iraq, the prevention of terrorism inside Japan, including US-linked facilities in the country, and assistance to refugees, it added.

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