But the point about neg rates is precisely that you CAN lend and borrow thus. EURIBOR, CHF and JPY LIBOR etc forwards trade >100. So arbitrarily assuming zero rates and thus pricing the forwards at 100 would generate an arbitrage, spoon-feeding others a free lunch. Nobody prohibits or enforces the FX markets to price in any way. FX will just price itself to be consistent with these, positive, negative, or 100bps different every day of the week if that's what the rates forwards want to do.
Something like $17tr of govvie paper trades at negative yields (a quarter of the bond market, or thereabouts). Lord knows how much has been traded in IR swaps at almost equivalent rates, representing real-world borrowing and lending below zero.
The lesson learned last decade is that the "zero lower bound" is an oxymoron, or at least of exaggerated importance. We were all understandably were wary of the experiment trying to cross this... cue Ghostbusters "crossing the beams" memes, or the intro sequences of any number of zombie movies. But Japan, Switzerland and Germany went negative, and stayed there. Ireland went negative (we smirked). Italy went negative (we all thought this represented some kind of sick joke, but it happened).
The "economic intuition here" is two-fold. Theoretically, one can argue that there should be some kind of equilibrium interest rate, that one could then expect to be biased positive. But why this should be nominal rather than real, versus a Wicksellian natural rate, let alone an "r-star" real natural zero, is up for discussion. Assuming in the first places these alternatives were even measurable in the first place, which they are not...
More practically, the objection to neg-rates was assumed to be that savers might avoid these by converting bank balances into banknotes; and then cashing them back in. Except you'll get reported for trying to spend 10,000 on a car with paper cash. Try buying a house with a suitcase of cash. I dare you ;-) Turn up with 100m in banknotes, and I promise the bank's regional AMLO (anti money laundering officer) will become more intimate with your financial affairs than your spouse.
The prosaic reality is that the investors who most hated negative skipped out of govvies and into credit and/or stocks, which was precisely the "portfolio channel" effect that the central banks were trying to achieve in the first place. Those wannabe "eat what you kill" bond vigilantes went veggie-lentil...
