Negative Yen Depo Rates

bidmasterx · Jul 20, 2005

I noticed the one month Yen deposit rate quoted -0.06% bid / 0.01%...so if I understand correctly, you deposit a certain amount of Yen, and after a month you receive LESS than the amount you originally invested! I checked with the data vendor and the quote is correct.

Anyone know why or how nominal interest rates can be negative?

The Kin · Jul 20, 2005

Quote from bidmasterx:

I noticed the one month Yen deposit rate quoted -0.06% bid / 0.01%...so if I understand correctly, you deposit a certain amount of Yen, and after a month you receive LESS than the amount you originally invested! I checked with the data vendor and the quote is correct.

Anyone know why or how nominal interest rates can be negative?

lol

sle · Jul 20, 2005

Quote from bidmasterx:
Anyone know why or how nominal interest rates can be negative?

that means you'd have to pay to short a bond. pretty usual stuff in JPY world

theTaoTrader · Jul 20, 2005

One of my friend told me that some of his companyâs workers in Japan have big safes in their home just to store cash. The negative nominal interest rates reflect the storage cost.

Quote from bidmasterx:

I noticed the one month Yen deposit rate quoted -0.06% bid / 0.01%...so if I understand correctly, you deposit a certain amount of Yen, and after a month you receive LESS than the amount you originally invested! I checked with the data vendor and the quote is correct.

Anyone know why or how nominal interest rates can be negative?

mtzianos · Jul 21, 2005

Quote from theTaoTrader:

One of my friend told me that some of his companyâs workers in Japan have big safes in their home just to store cash. The negative nominal interest rates reflect the storage cost.

I've never met a Japanese trader (although I've met traders from all over the rest of Asian zone and Australia).

I have read that the average Japanese keeps his savings in cash (not stocks like Americans do to a degree).

In the case you describe, i.e. "cash under the mattress" (or in safe at home), I've always wondered why don't the Japanese savers just buy physical gold?

bidmasterx · Jul 21, 2005

Quote from mtzianos:

why don't the Japanese savers just buy physical gold?

I don't think that's a good idea, as the deflationary pressures would cause the value of gold in terms of Yen to decrease.

zf trader · Jul 21, 2005

Also gold would be more expensive to store

5yrtrader · Jul 21, 2005

And why should they buy stocks Japan has been in a 15 year bear market

5yrtrader · Jul 21, 2005

Quote from bidmasterx:

I noticed the one month Yen deposit rate quoted -0.06% bid / 0.01%...so if I understand correctly, you deposit a certain amount of Yen, and after a month you receive LESS than the amount you originally invested! I checked with the data vendor and the quote is correct.

Anyone know why or how nominal interest rates can be negative?

Deflation

If paper money is worth more in the future and I loan you some money for a couple months, you will have to give me less paper money back when you repay because the real value has gone up. This is why people are storing money in safes in their homes.