Key money rate plunges close to zero on Tokyo market.
(EDS: UPDATING WITH WEIGHTED AVERAGE RATE)
The bellwether rate on the Tokyo money market fell close to zero Wednesday, following a decision by the Bank of Japan (BOJ) to boost liquidity in the financial markets.
The weighted average of unsecured overnight call money rates, which commercial banks charge each other on overnight loans, came to 0.06%, down sharply from 0.13% Monday.
Wednesday's rate is considered close to zero in view of a 0.02 percentage point commission charged by money brokers.
The central bank pumped ample funds into the banking system with bill-purchasing operations Wednesday morning, leaving the amount of funds in accounts held by commercial banks at the central bank up 1.8 trillion yen from Monday at 5.56 trillion yen.
On Monday, the BOJ decided to shift its monetary policy target from the overnight call rate to the balance of funds held in current accounts at the central bank, effectively resuming the 18-month-old zero-rate policy it abandoned last August.
Although the decision, which took effect Wednesday, calls for boosting the balance to around 5 trillion yen from 4 trillion yen, the central bank steered the balance above the target amount in order to curb upward pressure on interest rates from the issuance of government bonds, a BOJ official said.
Money market insiders said the call rate is likely to drop to effectively zero from Thursday.
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|Publication:||Japan Weekly Monitor|
|Date:||Mar 26, 2001|
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