Short-term market rate for end of fiscal 1st half rises to 1%.
The interest rate on an unsecured call loan from Friday through Monday soared to 1 percent on the Tokyo interbank money market Wednesday, against the Bank of Japan's target of 0.5 percent for the uncollateralized overnight call loan rate.
Market sources attributed the high call loan rate to credit squeeze fears as well as growing fund demand toward banks' book closings for the fiscal first half to the end of this month. Credit squeeze fears have emerged due to the fear of possible defaults on U.S. subprime mortgage loans.
The rate of 1 percent was agreed on a loan from a Japanese bank to a foreign bank, the sources said.
An average rate on uncollateralized overnight call loans due on Thursday stood at 0.527 percent.
The average rate could shoot up on overnight loans starting Friday, the sources said.