The Japanese government stayed alert Monday on possible economic turbulence following Britain's decision to leave the European Union in a referendum last week.
The government and Bank of Japan (BOJ) held a meeting Monday morning before the opening of the Tokyo stock market, discussing measures to cope with after-effects of the referendum. "Uncertainty and risk concerns remain in financial markets... The government must take all possible measures to prevent any negative impact on Japan's real economy," Japanese Prime Minister Shinzo Abe said at the meeting.
Abe also required the Bank of Japan to ensure adequate liquidity in markets and support the banking system. With market confidence recovering over the government pledge and investors scooping up battered stocks, Tokyo shares rebounded sharply Monday, though still far below the level before the referendum.
The 225-issue Nikkei Stock Average ended up 357.19 points, or 2. 39 percent, from Friday at 15,309.21. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 21.28 points, or 1.77 percent, higher at 1,225.76.
Meanwhile, in the forex market, the Japanese yen continued rising, with the U.S. dollar fetching 102.00-01 yen in Tokyo at 5 p.m. Monday, compared with 102.19-21 yen at 9 a.m. Monday morning and 103.05-10 yen in Tokyo at 5 p.m. Friday, raising concerns over further blows on the Japanese export industry as well as Abe's economic policy mix dubbed "Abenomics". The yen had briefly hit a record high in over two and a half years against the U.S. dollar in the 99 yen zone, following the Brexit vote on Friday to leave EU.
Officials and companies here also expressed concerns that Britain leaving the European Union could result in Japanese companies having to pay additional tariffs to sell products they have made in Britain to EU members. Some 1,380 Japanese companies have operations in Britain, with the manufacturing industry accounting for about 40 percent, according to credit research agency Teikoku Databank.
Japan's Nissan produced some 470,000 automobiles a year in the UK, with 80 percent of which exported to other European countries, while Toyota's factory in the UK produced over 190,000 cars a year. There are also concerns over the prospect of reaching agreement in the ongoing free trade negotiations between the EU and Japan.
"We will make utmost efforts to reach the economic partnership agreement between Japan and the European Union within the year," said Japan's Economy, Trade and Industry Minister Motoo Hayashi at a meeting Monday comprising government officials and executives of leading companies.
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