BLBG:Banks’ Dollar Funding Costs Fall for Second Day in Money Markets
The cost for European banks to borrow in dollars fell for a second day to the lowest level in a week, according to a money-market indicator.
The three-month cross-currency basis swap, the rate banks pay to convert euro interest payments into dollars, was 70.5 basis points below the euro interbank offered rate at 8:20 a.m. in London, according to data compiled by Bloomberg. That’s the lowest since Jan. 26 and compares with minus 74 yesterday.
The one-year basis swap was little changed at 62 basis points less than Euribor. A basis point is 0.01 percentage point.
A measure of banks’ reluctance to lend to one another in Europe was unchanged. The Euribor-OIS spread, the difference between the borrowing benchmark and overnight index swaps, held at 76 basis points.
Lenders reduced overnight deposits at the European Central Bank for the second consecutive day, placing 472 billion euros ($617 billion) with the Frankfurt-based ECB yesterday from 479 billion euros on Jan. 30.
To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net
To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net
