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UPDATE:Japan Welcomes BOJ-Fed Swap Deal; FX Action Unlikely

(Adds finance minister's comments; background)

 
   By Tomoyuki Tachikawa 
   OF DOW JONES NEWSWIRES 
 

TOKYO -(Dow Jones)- Bank of Japan Gov. Masaaki Shirakawa said Thursday a swap agreement among major central banks will help ease global market confusion triggered by the U.S. financial crisis in recent days.

Japan's Finance Minister Bunmei Ibuki also welcomed the deal, but said the international arrangement has nothing to do with possible government intervention in the currency markets.

The swap agreement "was reached for the purpose of smoothing and stabilizing financial markets...and international cooperation among central banks is appropriate," Shirakawa told a news conference Thursday.

He also said the deal will likely help prevent market instability in Japan, although the central bank isn't aware of any liquidity problems with the domestic banking sector at the moment.

The finance minister also said the agreement "is to provide enough dollar liquidity in the short-term money markets in Tokyo when it becomes necessary."

But the finance ministry "has the right to decide whether to intervene, so the swap deal concluded between the central banks is not aimed for such operations," Ibuki said.

The BOJ said earlier in the day that, as part of coordinated measures with other major central banks, it had signed a swap agreement with the U.S. Federal Reserve to supply U.S. dollar funds to market players in Japan.

The Bank of Canada, the Bank of England, the European Central Bank, and the Swiss National Bank are also involved in the measure, Japan's central bank said.

-By Tomoyuki Tachikawa, Dow Jones Newswires; 813-5255-2929; tomoyuki.tachikawa@dowjones.com

(Takashi Mochizuki, Takashi Nakamichi and Megumi Fujikawa contributed to this story.)

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(END) Dow Jones Newswires

September 18, 2008 06:40 ET (10:40 GMT)


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