JAPAN/FILE: Japan nominates a new Bank Of Japan governor while shares rebound and investors remain cautious ahead of U.S. Federal Reserve meeting

Record ID: 465006

  • Title: JAPAN/FILE: Japan nominates a new Bank Of Japan governor while shares rebound and investors remain cautious ahead of U.S. Federal Reserve meeting
  • Date: 18th March 2008
  • Summary: (W1) TOKYO, JAPAN (FILE) (REUTERS) BANK OF JAPAN BUILDING FLAG OF JAPAN BANK OF JAPAN EXTERIOR CURRENT BANK OF JAPAN GOVERNOR TOSHIHIKO FUKUI AT A NEWS CONFERENCE
  • Embargoed: 2nd April 2008 13:00
  • Keywords:
  • Topics: Finance
  • Reuters ID: LVABT6S5COHBB3V9UHVBXH9MONZT
  • Story Text: The Japanese government nominates Koji Tanami as Bank of Japan governor, while Japan's benchmark Nikkei average inches back from Monday's sell-off.
    Investors remain cautious ahead of a U.S. Federal Reserve's interest rate-setting meeting on Tuesday.
    The Japanese government nominated a former top finance ministry official, Koji Tanami, as the next governor of the central bank after Toshihiko Fukui retires on March 19, a ruling party lawmaker said on Tuesday (March 18).
    Tanami is currently governor of the Japan Bank for International Cooperation (JBIC), a government-backed lending agency, and is a former vice minister at the finance ministry.
    Tanami, a former top finance ministry official, said in his parliamentary hearing that although the global economy was growing, its rate of growth was slowing.

    "With markets fluctuating wildly, and the slowing down of the U.S.
    economy due to the subprime problem, the movements in oil prices all mean we are facing increased downward risk," he said.
    Prime Minister Yasuo Fukuda had earlier last week nominated Deputy Governor Toshiro Muto as the successor to Fukui but his nomination was vetoed by opposition parties, which control the upper house of parliament.
    The BOJ governor nominee needs approval from both houses of the parliament to be appointed but top government spokesman Nobutaka Machimura was confident they had chosen the right man this time.
    The name surprised analysts, who had not seen Tanami as a potential candidate. Some do not see him as being much different from the previous candidate.

    "Going back in the records and I vaguely remember Tanami from 10 years ago as having various senior positions within the Ministry of Finance.
    He seems very similar to Muto in terms of being a political insider, not being a specialist in monetary economics and not really having any particular qualifications for this job," Richard Jerrams, Chief Economist at Macquarie Capital Securities told Reuters on Tuesday.
    A senior lawmaker in Japan's main opposition Democratic party, Kenji Yamaoka, said there was almost no chance the party would accept Tanami as BOJ governor.
    Meanwhile, Japanese stocks snapped a three-day losing streak on Tuesday despite lingering concerns about the yen's strength versus the dollar, as investors picked up beaten-down shares such as Canon Inc after the previous day's sell-off.
    But investors held back to see the outcome of the U.S. Federal Reserve's interest rate-setting meeting later in the global day, market players said.
    The benchmark Nikkei average was up 1.5 percent or 176.65 points to end at 11,964.16 on Tuesday.
    The Nikkei has lost more than 8 percent in the last three days as the dollar hit a 13-year low against the yen as well as renewed fears about the global credit crisis.
    The broader TOPIX index was up 1.2 percent or 13.98 points at 1,163.63.
    While all eyes are on the Fed's rate decision, traders were also watching the political standoff over who will replace outgoing Bank of Japan Governor Toshihiko Fukui.
    The dollar was trading around 97 yen holding above a nearly 13-year low against the Japanese currency struck on Monday.
    Investors were wary of a stronger yen as it makes Japanese goods less competitive overseas and cuts into profits made abroad when brought back to Japan.
    Many Japanese exporters have assumed a currency rate of 105 yen to the dollar when drawing up their profit forecasts.
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