Japan Pumps Up the Liquidity

Japan's central bank will infuse 10 trillion yen ($115.8 billion) into commercial banks through short-term loans in an effort to fight deflation and boost liquidity.

The move comes amid growing pressure from a surging yen and declining consumer prices. The country's central bank also maintained its ultra-low interest rate of 0.1 percent.

In recent days the yen has climbed at a sharp rate and the government has been critical towards the central bank about being too complacent towards economic troubles. Also months of falling prices of consumer goods has caused worries about deflation in Japan's economy.

Last week the yen reached 84.83 against the U.S. dollar, the highest since 1995, causing threatening sentiments of exporters within the country. The yen is currently at 86.82 compared to the U.S. dollar.

The move comes as the central bank has vowed to do the "utmost" possible to battle the problems plaguing the world's second largest economy. The central bank has said that the program aims to ease the current effects on the yen and cause a decline in the longer-term interest rates of the country's money market.

"We took this step today because of concerns over recent developments in the global financial situation, as well as unstable currency movements that may have a negative impact on the economy," Bank of Japan Gov. Massaki Shirakawa said.

The government of Japan also said Tuesday that in complete additional stimulus measures that will encourage employment and growth that will total at least 2.7 trillion yen ($31 billion).

Shriakwa and Japan Prime Minister Yukio Hatoyama will hold talks on Wednesday to discuss the slowing factory output and falling wages with in the country, even as the country’s gross domestic product has expanded in the past two quarters.

Related ETFs:
iShares MSCI Japan Index (NYSE: EWJ)
Ultra Yen ProShares (NYSE: YCL)
UltraShort Yen ProShares (NYSE: YCS)

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