Japan to use forex reserves to fight credit crunch

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TOKYO, March 3 (AFP): Japan will use five billion dollars from its foreign currency reserves to help companies raise funds during a worsening recession in Asia's largest economy, the finance minister said today.

Tokyo will lend the money to the state-backed Japan Bank for International Cooperation (JBIC) to keep credit flowing, Kaoru Yosano told reporters.

"Taking into account the current severe conditions for those trying to procure foreign funds, we've decided to lend foreign currencies (from the reserves) to the JBIC as a temporary, extraordinary measure," Yosano said.

Toyota Motor Corp.'s financial unit said Tuesday it had asked to borrow money from the JBIC, with local media putting the request at about two billion dollars. It would be the bank's first loan to a Japanese auto maker.

Japan has foreign exchange reserves of more than one trillion dollars, the second-largest in the world after those of China.

The government has already announced a series of steps to stimulate the economy, including a plan to hand two trillion yen (21 billion dollars) back to the public to kick-start consumer spending.

Japan said last week that it had started work on an emergency plan to halt a plunge in share prices that Tokyo fears could deepen the recession in Asia's biggest economy. It did not say what form any action might take.