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Limited market impact foreseen

The yen and Japanese bond futures dipped after the announcement, but analysts said even ratings cuts would have limited market impact given Japan’s reliance on the vast pool of domestic household savings for its borrowings.

business Updated: Jan 26, 2010 21:19 IST

The yen and Japanese bond futures dipped after the announcement, but analysts said even ratings cuts would have limited market impact given Japan’s reliance on the vast pool of domestic household savings for its borrowings.

“There have been repeated (credit downgrades) in the past 10 years, and the past record shows they won’t have much impact on financial markets,” said Naoki Murakami, chief economist at Monex Securities in Tokyo.

S&P said Japan’s position as the world’s largest net creditor, the yen’s status as a reserve currency, a diversified economy and a resilient financial system mitigated the debt pressures.