Japan Appeals for Calm, Vows Bank System Is Stable

Japan on Wednesday made an extraordinary appeal for calm among the public and financial markets over the country’s economic crisis.

A rare joint statement by Finance Minister Hiroshi Mitsuzuka and Bank of Japan Governor Yasuo Matsushita also promised there were no more major bankruptcies ahead for Japanese financial institutions.

In a sign of how the closures of four financial institutions, including two in the last three days, have rattled the public, the statement said people were withdrawing their deposits from banks. The officials urged the public to have faith in Japan’s financial system.

“We strongly urge the public not to pay heed to irresponsible rumors and to act calmly,” the statement said. “We will provide funds smoothly and without hesitation so that repayment of financial firms’ deposits and other payments will not be hindered.”

Asked why the ministry and central bank decided to issue a statement, Mitsuzuka said: “Fund-raising difficulties were detected in short-term money markets because of groundless rumors, so we decided to issue the statement.”

The statement was issued as Mitsuzuka canceled plans to attend a meeting of Southeast Asian finance ministers in Malaysia next month and Eisuke Sakakibara, a vice minister known as “Mr. Yen” for his influence in currency markets, canceled a trip to Hong Kong, where Asian currency traders will gather this weekend.

Mitsuzuka and Sakakibara acted after Japan went through more financial pain Wednesday morning over the collapse of a small regional bank, Tokuyo City Bank, two days after giant brokerage Yamaichi Securities started liquidating.

Against the trend, Tokyo’s Nikkei-225 stock index rose, buoyed by hopes that politicians were moving toward deciding on the controversial step of using public funds to help clean up the financial sector’s mess.

The Nikkei opened higher today after closing up 1.12% Wednesday. On Tuesday, the stock exchange fell more than 5%.

Meanwhile today, Japan’s merchandise trade surplus for the first 10 days of November rose 6.2% from the same period a year ago, as exporters boosted shipments to the U.S. and Europe to offset slower demand in Asia.

The country’s trade surplus--the value of all goods passing through Japanese ports--stood at $1.68 billion for the period, the Finance Ministry said. Exports grew 5.4%, while imports increased 5.2%.

Japan’s surplus expanded 185.3% in the first 10 days of October and 139.7% for the full month from a year earlier.

Manufacturers are exporting more to the U.S. and Europe to offset a slowdown in sales of big-ticket items, such as machines, automobiles and electronics, following a series of tax increases this year.

“The only support for the economy is coming from overseas,” said Akio Yoshino, an economist at Credit Suisse Asset Management, before the report.

Exports to the U.S. are offsetting declines of exports to Asia following the devaluation of several Southeast Asian currencies.

Still, Japan’s overall surplus will continue to grow as long as demand in the U.S. and Europe remains strong, economists said.

The 10-day and 20-day figures don’t break down trade by nation. Country-by-country data on November’s full-month trade totals will be released in mid-December.

* ASIAN AID: Clinton administration is under fire for not doing more to stem Asia crisis. A1