Containing Damages of Brexit

The founding six nations of European Community, Belgium, France, Germany, Italy, Luxembourg and Netherland, agreed on requiring United Kingdom quick start of negotiation for leaving European Union to contain chain reaction of exiting E.U. Realizing Brexit would not a simple nightmare, Japan started considering defensive measures to avoid collateral damages. The focusing point was economic stability.

After watching simultaneous decline of stock prices in the world, Ministry of Finance, Financial Service Agency and Bank of Japan held an extraordinary meeting to discuss actual measures for dealing with volatile international economy on Saturday. Assuming prolonged confusion in international monetary market, higher value of Japanese yen and further decline of stock prices next week, they shared recognition of possible crisis of recession both in Japan and the world and reconfirmed to take every measures to avoid it.

Minister of Finance indicated that intervention in foreign exchange to maintain the price of Japanese yen, saying “We will respond appropriately.” It is possible for Bank of Japan to increase the supply of foreign currency not to disturb procurement of foreign currency with reluctance on currency exchange between private banks. To supply U.S. dollar to the market, BoJ will take advantage of currency exchange system with major central banks in Europe.

Analysts predicted that the value of Japanese yen could be rising up to ¥95 against $1 in next few months. Some found it possible that Nikkei Average would decline to the level of ¥14,000. They were closely watching whether the groups for leaving E.U. would gain more power in Spanish parliament after the national election on Sunday. Stock market is highly vulnerable with speculation of possible secession of Spain or France.

How Brexit affects ordinary life of the Japanese? High value of Japanese yen will cause price down of imported goods. There might be sales campaign for foreign commodities in supermarkets. Car drivers may be rewarded with reasonable price of gasoline. Foreign travel will be easier with preferable currency exchanging rate.

Nevertheless, political leaders are growingly uncomfortable on the consequence of British decision. Prime Minister Shinzo Abe insisted that he was right when he proposed taking every measure to avoid world economy crisis in G7 Summit last month. “What is most needed now? It’s stability of politics,” told Abe in his campaign speech for the election of House of Councillors next month.

The opposite parties are trying hard for sealing the fate of Abenomics. “Abenomics party is over,” appealed President of Democratic Party, Katsuya Okada. Economic policy is looming up to the center of their campaign.