Asian Banks attempting to avoid further crisis

Asian central banks are promising to take action in order to take preventative action as the financial crisis continues, amid fears that the backlash from the $700 billion financial rescue package rejection would have a huge impact.

So far both the central banks of Japan and Australia have pumped $20.8 billion into the monetary system with Korea, India and Hong Kong similarly pledging to take the same evasive action.

In a response to ‘Black Monday’ Asian stocks have fallen due to the threat of Asian economies taking a similar turn towards recession.

This fear does seem to be materialising at this point as Japan’s industrial production fell at the fastest pace for over 5 years whilst South Korea’s exports have taken a sharp downturn.

The MSCI Asia Pacific Index fell 3 percent to 108.05 today, which adds to the 4.9 percent loss from last week.

Joseph Yam, Chief Executive Officer of the Hong Kong Monetary Authority, said that this is an extraordinary situation and that Asia’s central banks should do all they can as the Bank of Japan has promised to double the amount of dollars it will offer local and foreign financial institutions to $120 billion.

Injecting funds into the system is seemingly the best policy and thus far the central banks have answered the rallying call despite their currencies falling.

The rupee fell to 47.115 against the dollar which is the lowest level since June.

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