This was the BoJ's first three-month dollar liquidity operation since last month's accord by the world's top central banks to cut the cost of the US currency to mitigate the impact of Europe's debt crisis intensified.

The Japanese central bank supplied $4.756 billion in two operations expiring on March 8, 2012, much bigger than the $200 million the BoJ had supplied last month in two operations of a similar duration.

The lending rate came to 0.610 percent from 1.120 percent in the previous three-month operation on Nov. 29 but still above the three-month dollar LIBOR rate of 0.5435 percent on Monday.

Markets keenly awaited the auction for gauging demand, particularly after the stronger-than-expected outcome of the European Central Bank's dollar auction last week helped ease the "stigma" associated with tapping central bank auctions.

Last week, the BoJ supplied $25 million in an operation maturing in a week as the coordinated central bank action encouraged Japanese banks to place bids to test the scheme.

The dollar-funding operation, under which the BoJ offers unlimited amounts against collateral, had been untapped for more than a year until last month because it typically used to be more expensive than borrowing dollars in the open market.

The Federal Reserve, European Central Bank and the central banks of Japan, Canada, Britain and Switzerland said last week they would reduce the cost of existing dollar swap lines by 50 basis points and extend the size and timing of the lines, to ease strains in financial markets.