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.
  

