Japan Unsecured Overnight Call Rate Falls to Record Minus 0.074%

Japan’s key overnight lending rate dropped to a record low in a sign the central bank’s negative rate policy is spreading to the nation’s core funding market.

The volume-weighted average for the unsecured overnight call rate fell to minus 0.074 percent on Monday. The rate had been hovering around zero since the BOJ began on Feb. 16 to charge 0.1 percent to some reserves financial institutions park at the central bank.

Volumes for the unsecured overnight transactions -- ground zero for funding markets as it is where banks lend to each other -- have plunged since the central bank move. The outstanding balance of interbank activity dropped to 3.09 trillion yen ($28.4 billion) on Friday, near the record low of 2.97 trillion yen reached March 31 at the end of Japan’s fiscal year. Volumes averaged 20.4 trillion yen in 2015.

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