BLBG:Dollar Funding Costs Fall to Two-Week Low in Euro Money Market
The cost for European banks to borrow in dollars fell for the second day to the lowest in more than two weeks, according to a money-markets indicator.
The three-month cross-currency basis swap, the rate banks pay to convert euro interest payments into dollars, was 23 basis points below the euro interbank offered rate at 8:25 a.m. in London, from minus 24 yesterday, data compiled by Bloomberg show. The measure is the lowest since Oct. 5.
The one-year basis swap was 25 basis points, or 0.25 percentage point, below Euribor from minus 25.5 yesterday.
A measure of European banks’ reluctance to make unsecured loans to one another held near the lowest since August 2007. The difference between Euribor and overnight index swaps, known as the Euribor-OIS spread, was 11.3 basis points.
The European Banking Federation’s euro overnight index average, or Eonia, of unsecured lending deals was little changed at 0.089 percent yesterday. The Eonia swap, an estimate of average overnight borrowing costs over the next three months, held at nine basis points.
Lenders cut overnight deposits at the European Central Bank yesterday to 245 billion euros ($318 billion) from 247 billion euros the day before.
To contact the reporter on this story: Katie Linsell in London at klinsell@bloomberg.net
To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net
