TOKYO -- Expectations of a rise in U.S. interest rates have pushed the cost of buying dollars with yen to a nine-year high, a potential blow to Japanese banks seeking more business abroad as ultra-low rates squeeze domestic returns.
Japanese financial institutions must procure dollars when lending to American companies or investing in U.S. debt. Swapping yen for greenbacks cost an annualized 1.972% above market rates at the end of November, according to Yuuki Fukumoto of the NLI Research Institute. This is the highest since September 2008, when the global financial crisis sparked a scramble for dollars that sent the premium as high as 5.396%.
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