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Shinzo Abe urges G7 to pull together in the wake of Brexit

He said that it was vital for advanced nations to pull together on sending a global, unified message that everything was being done to ensure stability in markets

IANS  |  Tokyo 

Shinzo Abe
Shinzo Abe

Japanese Prime Minister on Tuesday said his government will continue to liaise closely with other countries in a bid to mitigate the fallout from voting to leave the European Union.

Abe, at a meeting here, said it was vital for advanced nations to pull together on sending a global, unified message that everything was being done to ensure stability in markets, Xinhua news agency reported.

"It is important for the G7 countries to join forces and keep sending the message to the market that we will make utmost efforts to stabilise the financial market," Abe said.

Being himself under fire for the lack of efficacy of his "Abenomics" policy blend, ahead of an upper house election next month, Abe told Finance Minister Taro Aso to closely watch the currency market. It has already been viewed by the Japanese government as being subjected to "one sided moves", hinting at possible currency intervention.

The yen, often used as a safe haven in times of global economic turmoil, has been pushed higher versus a basket of other currencies following the vote, which saw the pound plummet to levels not seen in more than 30 years as the stock market here crashed 16%, which was more than lost following the shock in 2008.

On Friday, the US dollar tanked to 99 at one point for the first time since November 2013, causing monumental consternation to the government and Japan's key export sector which is heavily reliant on a weak to bolster profits in overseas markets and ensure their competitiveness.

Japanese exporters with a presence in due to accessibility to markets in the EU, have been mulling pulling out their investments in and looking to nations to relocate.

Emerging economies and Asian hubs are also being floated as alternative relocation options for companies who want to invest in markets with seamless multilateral trade deals to be made.

As well as telling Aso to act swiftly if deemed necessary. Abe also told Bank of Governor to take the necessary measures to ensure monetary stability, to which Kuroda replied the central bank, "will take all possible measures whenever needed".

At its last policy meeting, the BOJ surprised markets by staying pat on its monetary policy. But economists believe that should the stay unacceptably high for much longer on confusion related to Britain's next Brexit-related steps, or markets here remain overly pressured, then the bank would unveil more easing measures from its arsenal. This could include further plunging its interest rate into negative territory or increasing the size of its already massive asset purchasing programme.

On Tuesday, the BOJ auctioned off $1.48 billion worth of funds to financial institutions wanting to snap up the US currency, with the dollar-funds supplying auction marking the biggest since December 2014, with all bids being placed accepted by the central bank.

Japan's Foreign Minister Fumio Kishida, for his part, said he will talk over phone with Foreign Policy chief Federica Mogherini in a bid to lessen further blows from Britain's move out of the He would also talk to British Foreign Secretary Philip Hammond to stay up to date with Britain's moves.

"I hope to grasp the current situation and exchange views on the outcome of the EU summit starting on Tuesday," Kishida said. Adding, "we will continue to hear the voices of Japan's economic circles and make efforts to heighten the predictability of the economy."

First Published: Tue, June 28 2016. 15:10 IST