Japan has said that it might discuss becoming part of the bailout plan to help Greece, which is looking like a global plan. The country’s finance minister, Jun Azumi, commented on the debt crisis, saying that eurozone countries must create a rational plan in order to calm markets and nervous investors.
A Drop in the Market
The Nikkei 225 fell yesterday to its lowest point in two and a half years. In addition, the global economy is unstable, and there are worldwide concerns that the debt crisis could have an impact on global growth, pulling the economy back into recession. However, the Nikkei rose in today’s training.
Mr. Azumi has been quoted saying, “If there is a scheme that is based on a firm process, involves a reasonable amount of money and could provide the world and markets with a sense of security regarding a Greek bailout. I would not rule out the possibility of Japan sharing some of the burden.”
Japan Impacted By Sovereign Debt Crisis
Experts have given reasons as to Japan’s consideration of sharing this financial burden came from the idea that the country wants to ensure the eurozone is stable in order to try and stabilize the global economy. Europe is important for Japanese exports and the country is worried that if no solution can be found quickly to the sovereign debt crisis, which continues, it could impact growth in Japan, amidst a lack of demand for Japanese products.
Masaki Kanno from JP Morgan said that Japan would be impacted if the debt crisis was not contained and spread to the rest of the globe. In addition, the market volatility means investors move to traditionally “safe” investments, like the yen. If this occurs, the Japanese yen would continue to strengthen against the dollar and the euro, making products cost more and hurting trade further.
In addition, a stronger currency would mean that companies lose money when converting their foreign earnings into yen. The Tokyo Stock Exchange has seen large decreases due to the debt crisis, which, if they continue, could plunge the country’s economy further into turmoil as banks and insurance companies in Japan invest quite a bit of money in the stock market. The eurozone is currently in discussion about how to stop the Greek crisis from spreading.