The double-digit plunge was the market’s biggest single day rout since the 1987 Black Monday crash.
Fears of US recession risks and the unwinding of investments funded by a cheap yen sparked market stress, and a hawkish turn by the Bank of Japan (BOJ) last week raised alarm about how fast the central bank would tighten monetary policy.
BOJ Deputy Governor Shinichi Uchida addressed those worries on Wednesday, saying it won’t hike rates when financial l markets are unstable.
“As we’re seeing sharp volatility in domestic and overseas financial markets, it’s necessary to maintain current levels of monetary easing for the time being,” Uchida said in a speech to business leaders in the northern Japan city of Hakodate.
Comments from Federal Reserve officials this week and more economic data have also soothed some concerns of a downturn in the United States, but market participants are keeping a vigilant eye on developments.
“The biggest concern in the markets ahead will be whether fears of a US recession will ease,” leaving them highly sensitive to inflation and jobs data for the time being, wrote Morgan Stanley MUFG analysts in a note to clients.
The yen reversed on Tuesday from a seven-month peak hit at the beginning of the week, but has since strengthened from the previous session’s lows.
The broader Topix was up 2.79 per cent.
