Zeev's Turnips Patch-No Politics (ZEEV)

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Strange Activities? How about negative interest rates??

TOKYO - Japanese domestic interest rates fell below zero for the first time on Friday, the effect of the Bank of Japan's policy of flooding the banking system with excess cash.

Bankers said the rate on overnight call money traded between banks dropped to minus 0.01 per cent and minus 0.02 per cent for January 27-28.

By borrowing at a negative rate, borrowers, thought to be foreign banks on Friday, pay back less than the amount borrowed.

Lending money at a loss may seem like a foolish deal, but for the lender it is a way to reduce its yen exposure at a time when confidence in the Japanese banking system is low.

Bankers said a total of about 15 billion yen (S$220 million) was traded at a negative rate.

http://straitstimes.asia1.com.sg/money/story/0,4386,168284,00.html


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