SHORT-TERM YEN INTEREST RATES SEEN FALLING SOON
Japanese short-term interest rates,
buoyed recently by seasonal factors, are likely to fall from
the beginning of April when the new financial year begins,
money traders said.
    The Bank of Japan is expected to encourage the trend
following its attempts to pressure rates to enhance its
discount rate cut on February 23, they said.
    The Bank cut the rate to 2.5 pct from three, and began
actively injecting funds into the money market to offset rate
rises resulting from the end-of-fiscal-year surge in demand for
funds from financial institutions.
    Despite its attempts to dampen rates with measures such as
aggressive commercial bill purchases, the central bank has
failed to remove all upward pressure, money traders said.
    Attractive interest rates offered by domestic banks to
compete for time deposits of more than 600 mln yen has
underpinned short-term rates, they said.
    Interest rates on time deposits of more than 600 mln yen
were decontrolled by the Finance Ministry last September.
    This resulted in such deposits with domestic banks rising
to 17,830 billion yen by the end-December, a three-fold
increase on end-December 1985 levels, bankers said.
    On March 31, the money market expects to see a 2,000
billion yen surplus resulting from government payment of fiscal
funds, money traders said.
    From April 1, they predict the unconditional call rate will
fall to 3.5000 pct from 3.7500 pct today and the one-month
commercial bill discount rate to drop to 3.7500 pct from 4.0635
pct.
    They predict the three-month bill discount rate to slip to
3.875 pct from 4.0000 today and the three-month certificate of
deposit rate to slide to 4.10/4.15 from 4.35/25.
 REUTER
