Bankruptcies In Japan Fall To The Lowest In 4 years

Daily Forex Fundamentals | Written by ecPulse.com | Oct 08 09 07:40 GMT |

The easing credit crunch started to help more companies in Japan avoid bankruptcy during the month of September, where the index that measures bankruptcies fell to the lowest in 4 years, stressing the ability of Japanese firms to survive the current financial crisis. The yearly index of bankruptcies which measures the number of companies that filed for bankruptcy during last month with liabilities of over 10 million Yen, fell to -18.0% in September from the previous reading of -1.00%. 1155 companies filled for bankruptcy in September marking the lowest since April 2005. Japan's recent economic fundamentals confirm that the worst for the crisis ended during the first quarter of this year, as a result of the stimulus plans and the monetary easing policy that helped support many sectors, although there were some concerns that if the government end its support to the economy many sectors might start falling. The improvement in global demand in addition to the strong recovery seen by the Chinese economy helped improve Japan's exports. However, there is still a major problem that the economy faces right now and that is the increased exchange rate of the currency. As the yen rose yesterday against the dollar to its highest in 8 months at 88.0, and this reduces the competitiveness of Japanese products and goods in the global market. The Japanese authorities decided to stop their non-standard financial programs by the end of this year, as a result to the improvement started to be seen within the financial system, where big companies started having access to the needed funds while small companies were able to avoid bankruptcy as a result to the recovery seen by the economy. Since interest rates in Japan reached to 0.10% and there were no more means to help the economy throughout the monetary policy, authorities started injecting liquidity in the financial markets to unfreeze the credit markets and buying bad debts and troubled assets from the Japanese companies in order to cushion the fall resulted from the severe decline in global demand. Despite the improvement witnessed by several sectors in Japan, there are still fears that the economy may witness a relapse, since exports did not rise sufficient to support the economy and the domestic consumption cannot compensate completely for the decline in exports. The rise in unemployment also played a role into keeping households from spending freely. The Japanese Finance Minister said during the G7 meeting held in Istanbul that the government is not reluctant to intervene in the currency markets in order to stabilize the local currency, which started to have a negative impact on the economy. The current rise in the Japanese yen against the dollar and other currencies might not leave options to the government but to work on reducing the value of the Japanese yen Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk