Since the summer of 2014, U.S. dollar funding rates implied in foreign exchange swaps have risen, as the net demand for dollars in the foreign exchange swap market has increased (Chart 3). This means that foreign investors with dollar cash liquidity can convert dollars into yen via a foreign exchange swap contract and borrow yen at a much cheaper rate.
Since yen money market rates are already at almost zero, the yen funding cost for these investors would most likely turn negative. They can take advantage of the negative funding cost by investing in T-Bills even with negative rates. This investment strategy can still capture a reasonable margin if the yen swap costs are deeper in the negative.