Interbank rates edge up as yen falls
Interbank rates rose modestly yesterday morning as the yen weakened against the US dollar in early trade.
The one-month rate passed the psychologically sensitive 10 per cent level to reach 10.25 per cent, 1.5 percentage points up from Thursday's 8.75 per cent.
The movement will put more pressure on banks to raise prime lending rates - 10 per cent at present - because they tend to finance most long-term assets with one-month interbank borrowings.
The three-month rate - governing most corporate debt interest - also rose one percentage point to 10.5 per cent.
Traders said banks began to shore up positions in Hong Kong dollar forwards - which push up money-market rates - when they saw the yen hit a low of 143.02.
The local currency weakened to HK$7.7495 to the US dollar from Thursday's $7.7440 after reported remarks by Financial Secretary Donald Tsang Yam-kuen were interpreted as a softening of the Government's stance on the dollar peg.
