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I am trying to build Japanese Yen interest rate curves. When defining the curve instruments for the 'OIS' (discount) curve (aka TONAR), I am uncertain as to which rate to use for the overnight deposit at the short end. Should I be using the offshore jpy depo rate or the onshore BoJ depo rate; and why?

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Generally it is best to use the rates that best capture how the collateral of the instruments are priced. If the overnight collateral on the instruments is managed using offshore JPY depo, then this would be a good choice.

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