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Japanese and Australian money market rates fell as U.S. lawmakers worked to salvage a financial- rescue plan and central banks pumped $15 billion into the system.

The Bank of Japan added 1.2 trillion yen ($11.3 billion), helping lower the overnight call rate to 0.4 percent from 0.7 percent, the highest level since April 1, according to Tokyo Tanshi Co. Overnight U.S. interbank loan rates fell to 3.85 percent from as high as 7.3 percent earlier today in Tokyo.

“With news from Congress they will come up with a solution, the high anxiety of yesterday's open has been stripped out to an extent,'' said Peter Pontikis, a treasury strategist at Suncorp- Metway Ltd. in Brisbane. “A fear premium got locked.''

Central banks including the U.S. Federal Reserve and the European Central Bank are pumping billions into money markets to keep them functioning. The cost of borrowing in dollars overnight in London rose the most on record yesterday after Congress's rejection of Treasury Secretary Henry Paulson's plan caused an unprecedented squeeze in credit markets.

Senate Democrats and Republicans agreed to vote today on legislation that would give Paulson broad authority to buy troubled assets from financial companies.

Asian financial markets including China, Hong Kong and Singapore are closed today for holidays.

`Better Quality Assets'

The Reserve Bank of Australia injected A$4.67 billion ($3.7 billion) as one-month bank rates fell 0.285 percentage point to 7.1 percent at 3 p.m. in Sydney, the lowest since January.

The BOJ and RBA “will continue to intervene as much as is needed to maintain liquidity in inter-bank markets,'' said Guthrie Williamson, portfolio manager in Sydney at Principal Global Investors, which manages $244.9 billion in assets globally. “Banks are definitely more resilient in Japan and also in Australia because of better quality assets.''

Australian banks' borrowing costs fell from near the highest since Bear Stearns Cos. failed six months ago, according to a gauge that measures the availability of funds in the market. The difference between the rate banks charge each other for three-month loans and the overnight indexed swap rate stood at 62.5 basis points, from 97.67 points yesterday.

The rate that Japanese banks charge overseas lenders for overnight loans fell to 0.75 percent, from 1 percent yesterday, the highest since at least December payday loans cash advance.

Financial shares in Asia gained. Westpac Banking Corp., Australia's third-largest bank, rose 5.3 percent and Nomura Holdings Inc., Japan's largest brokerage, jumped 4.8 percent.

Credit Risk Drops

The cost of protecting investors in Japanese and Australian corporate bonds from default also declined. The Markit iTraxx Australia index fell 15 basis points to 185.5, Citigroup Inc. prices show. The benchmark is tied to the debt of 25 companies and drops as perceptions of credit quality improve. The Markit iTraxx Japan fell 6 to 158, according to Morgan Stanley.

The BOJ yesterday said Japan's banking industry has been resilient during the U.S. financial crisis, though slower economic growth at home is stalling profit growth.

“Japan's financial system, on the whole, has remained stable despite continued turmoil,'' the central bank said in its semi-annual Financial System Report released yesterday. “Credit risk has started to increase amid the sluggish economic growth, and future developments require vigilance.''

India, Korea

India's benchmark overnight borrowing rate climbed to an 18-month high of 17.5 percent, the most since March 2007, according to data compiled by Bloomberg.

The central bank should make more cash available to lenders to ease a credit shortage and restore investor confidence, executives at Alok Industries Ltd., Jaiprakash Associates Ltd. and Balrampur Chini Mills Ltd. have said.

South Korea's three-month interbank offered rate held at 7.15 percent yesterday, the highest since May 2002.

The nation plans to provide at least 4.3 trillion won ($3.6 billion) in extra loans to small and medium-sized companies struggling from higher costs.

The extra loans will be provided through state-controlled banks including Korea Development Bank and Industrial Bank of Korea, the Financial Services Commission said today in a statement. The government will ask the central bank to raise the limit on total loans to commercial banks, the regulator said.

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