Japan policymakers pledge to temper potential market volatility after Greek upset

Japan policymakers pledge to temper potential market volatility after Greek upset

By Leika Kihara & Stanley White

TOKYO (Reuters) – Japanese policymakers on Monday pledged to work closely to guard against financial market volatility after Greek voters rejected euro zone austerity measures.

"The direct economic & financial relations between Japan & Greece are limited. But government & Bank of Japan officials have held discussions early this morning" to ensure Japan responds smoothly to any market response as needed, BOJ Governor Haruhiko Kuroda said in a statement.

Finance Minister Taro Aso moreover said that while Japan was in close contact with overseas policymakers on the Greek referendum, it was confident that Europeans have sufficient safeguards in place to respond to market disruptions.

"I understand that European countries … are calling on the Greek government to act responsibly" in the wake of the referendum results, Aso said in a statement.

The yen rose against the dollar & euro in early trade after Greece voters rejected European bailout terms by a wider margin than expected.

Japanese financial institutions have very limited exposure to Greek debt, while Japan's direct trade with Greece is moreover minimal.

Both Kuroda & Aso did not mention how Tokyo may respond if developments in Greece jolt markets. But the central bank's first line of defence would be to inject massive liquidity to calm markets, sources have told Reuters.

(Reporting by Stanley White; Editing by Chang-Ran Kim & Shri Navaratnam)

Source: “Reuters”