What is TONAR (Tokyo Overnight Average Rate)?

TONAR, or the Tokyo Overnight Average Rate, is a benchmark interest rate that serves as an alternative to LIBOR (London Interbank Offered Rate) for Japanese Yen (JPY)-denominated transactions.

TONAR is considered one of the key benchmark rates for the Japanese money market and serves as a reference for various financial instruments, including short-term interest rate derivatives, loans, and other financial contracts.

TONAR is calculated as a volume-weighted average of uncollateralized overnight transactions in the Japanese money market. It reflects the average interest rate at which banks lend to each other on an unsecured basis overnight.