Continuing with its firefighting monetary efforts, the Japanese central bank today injected another 8 trillion yen to the beleaguered economy, pushing the total stimulus to 23 trillion yen (about $281 billion) in just two days.
However, investors continued to punish stocks, with the key Nikkei 225 crashing over 10%, reportedly the worst fall in nearly four decades.
Bogged down by the devastating earthquake and tsunami last Friday, the world's third largest economy is now facing the threat of nuclear catastrophe.
Bank of Japan (BoJ) today extended a whopping 8 trillion yen (about $98 billion) and an amount of 3 trillion yen stimulus was unveiled later in the day, amid reports of rising radiation.
This would be on top of 15 trillion yen extended yesterday.
BoJ's initiatives are primarily aimed at ensuring that banks have enough liquidity for lending.
Investors went on a selling spree for the second straight trading session, as Nikkei 225 plunged 10.55% to 8,605.15 points. On Monday, shares tumbled over 6 per cent.
Already facing sluggish growth prospects, Japan would need huge amounts of money to rebuild the nation, most prone to natural disasters, according to analysts.
"Japan's economy is expected to return to a moderate recovery path.
However, the damage of the earthquake has been geographically widespread, and thus, for the time being, production is likely to decline and there is also concern that the sentiment of firms and households might deteriorate," BoJ today said.
On Monday, the central bank widened its asset purchase programme by 5 trillion yen, apart from extending 10 trillion yen for daily bank operations.
"This morning, the bank conducted a same-day funds supplying operation totalling 7 trillion yen, which was the largest amount ever conducted, and a future-day-start funds supplying operation totalling 3 trillion yen," it said yesterday.