Nov. 10 (Bloomberg) -- Asian money market rates fell as the Group of 20 nations urged central banks to keep cutting interest rates and China announced a $586 billion stimulus package.

Three-month Hibor, the benchmark for Hong Kong interbank loans, dropped 10 basis points to 2.14 percent as the city's monetary authority added funds to the system. Australian banks lowered the rate they charge each other for three-month loans by 3.7 basis points, or 0.037 percentage point, to 4.95 percent as the Reserve Bank of Australia signaled more rate cuts.

``Central banks around the world are ready to step in and do what's necessary,'' said Patrick Bennett, Asian currency and fixed-income strategist in Hong Kong at Societe Generale SA. ``Inflation is not a threat, growth is the critical target, so I think we'll see further easing.''

Borrowing costs dropped worldwide in the past month after central banks slashed interest rates and governments pledged as much as $3 trillion of emergency funds to tackle a collapse in trust among banks. Taiwan's central bank cut rates yesterday for the fourth time in seven weeks after a report showed the island's exports fell in October by the most in three years.

Taiwan's overnight interbank lending rate fell to 1.52 percent, the lowest since June 2006, from 1.6 percent.

Hong Kong, Singapore

Hong Kong's three-month interbank offered rate was the lowest since Sept. 16, following a series of cash injections by the Hong Kong Monetary Authority. The equivalent rate for U.S. dollar loans in Singapore, or Sibor, declined 4 basis points to 2.29 percent, the lowest since November 2004.

The HKMA added HK$1.94 billion ($250 million) to the banking system on Nov. 7 in New York trading to prevent the city's currency from strengthening beyond its fixed exchange rate. That followed an injection of HK$1.32 billion earlier the same day.

HSBC Holdings Plc, the bank with the biggest network in Hong Kong, cut its benchmark lending rate in the city by a quarter of a percentage point to a four-year low of 5 percent on Nov. 7. Standard Chartered Plc, the third-largest U.K. bank, reduced its so-called best lending rate in Hong Kong to 5.25 percent from 5.5 percent. Those rates take effect today.

Hong Kong banks may cut borrowing costs further, Wen Wei Po reported yesterday. Banks will consider lowering their best rates if the three-month Hibor falls below 2 percent, the newspaper said, citing Ben Hung, chief executive officer of Standard Chartered's Hong Kong unit.

Australian Banks

The gap between the rate Australia's banks charge each other for three-month loans and the overnight indexed swap rate, a measure of funding availability, fell 5 basis points to 44.8 points, the lowest since Sept. 12, the last working day before Lehman Brothers Holdings Inc. collapsed.

The London interbank offered rate for three-month U.S. dollar loans fell last week to a four-year low of 2.29 percent.

``We stand ready to urgently take forward work and actions agreed by our leaders to restore and maintain financial stability and support global growth,'' the G-20 said in a statement released yesterday following a meeting in Sao Paulo. ``Countries must use all their policy flexibility, consistent with their circumstances, to support sustainable growth.''

The Reserve Bank of Australia pumped A$870 million ($596 million) into money markets today. The central bank had estimated the system would have a deficit of A$1.28 billion, according to its Web site. Australian banks reduced deposits held at the Sydney-based RBA by A$393 million to A$5.49 billion on Nov. 7, the lowest since Sept. 16. Those holdings reached a record A$11.2 billion Oct. 20.

Libor, Spreads

The London interbank offered rate for three-month loans in U.S. dollars fell for the fourth week in the period to Nov. 7, dropping 74 basis points, according to the British Bankers' Association.

The Libor-OIS spread, which former Fed Chairman Alan Greenspan said in June should serve as a measure for determining when markets have returned to normal, narrowed to 174 basis points on Nov. 7. The spread measures the difference between the rate banks charge for three-month dollar loans relative to the overnight indexed swap rate.

That compares with 87 basis points on the last trading day before Lehman went bankrupt on Sept. 15, and an average of 11 basis points in the five years before the crisis started.

Libor, the benchmark for $360 trillion of financial products worldwide, is set by a panel of banks in a daily survey by the BBA before noon in London. Members provide estimates on how much it would cost to borrow in 10 currencies for terms ranging from one day to a year.

To contact the reporters on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net

Last Updated: November 10, 2008 00:38 EST