Dollar-borrowing costs between banks were near the cheapest compared with yen rates in 16 years, adding to the greenback's attraction as a funding currency.
The London interbank offered rate, or Libor, for three-month dollar loans declined to a record low of 0.29869 percent Wednesday, compared with 0.37 percent for the yen, according to the British Bankers Association. The difference between the two was 7.1 basis points, near the widest since March 1993.
Dollar borrowing costs became cheaper than those for the yen on Aug. 24, and the spread widened for 10 days until Tuesday. The greenback replaced the Swiss franc as the world's cheapest funding currency Tuesday.
The Tokyo three-month interbank offered rate for yen deposits abroad fell to 0.53538 percent, the lowest since February 2007, according to the Japanese Bankers Association.
Tibor for euroyen has dropped 20 basis points this year as the Bank of Japan kept its key overnight call rate at 0.1 percent and kept its supply of funds into the banking system under an emergency-credit program.