Dec. 7 (Bloomberg) -- The cost for European banks to fund in dollars fell for a third day to the cheapest in three weeks, according to money-market indicators.
The three-month cross-currency basis swap, the rate banks pay to convert euro payments into dollars, was 114 basis points below the euro interbank offered rate at 8:40 a.m. in London, from minus 119 yesterday. That’s the least banks have to pay since Nov. 14.
The one-year basis swap was 71 basis points under Euribor, compared with minus 73 basis points yesterday, data compiled by Bloomberg show. A basis point is 0.01 percentage point.
The Euribor-OIS spread, a measure of banks’ reluctance to lend to one another in Europe, was little changed at 100 basis points. The spread, which is the difference between the borrowing benchmark and overnight index swaps, widened to 101 points on Dec. 1, the most since February 2009.
Overnight deposits at the European Central Bank fell, as banks placed 325 billion euros ($437 billion) with the Frankfurt-based ECB yesterday, down from 328 billion euros a day earlier.
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