Jan. 6 (Bloomberg) -- The cost for European banks to borrow in dollars declined to the lowest in two months, according to money-market indicators.
The three-month cross-currency basis swap, the rate banks pay to convert euro interest payments into dollars, was at 102 basis points below the euro interbank offered rate at 10 a.m. in London. That’s the lowest since Nov. 7 and compares with 109 yesterday, according to data compiled by Bloomberg.
The one-year basis swap was 89 basis points less than Euribor, compared with minus 92 basis points yesterday. A basis point is 0.01 percentage point.
A measure of banks’ reluctance to lend to one another in Europe was little changed. The Euribor-OIS spread, the difference between the borrowing benchmark and overnight index swaps, was at 95 basis points from 94 yesterday. It widened to 101 basis points on Dec. 1, 2011, the biggest gap since January 2009.
Lenders increased overnight deposits at the European Central Bank to a record, placing 455 billion euros ($582 billion) with the Frankfurt-based ECB yesterday, from 444 billion on Jan. 4.
--Editor: Paul Armstrong
To contact the reporter on this story: Namitha Jagadeesh in London at email@example.com
To contact the editor responsible for this story: Paul Armstrong at firstname.lastname@example.org