Jan. 12 (Bloomberg) -- The cost for European banks to borrow in dollars declined to the lowest in almost four months, 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 86.5 basis points below the euro interbank offered rate at 8:27 a.m. in London. That’s the lowest cost since Sept. 15, 2011 and compares with minus 90 basis points yesterday.
The one-year basis swap was little changed from yesterday at 77 basis points less than Euribor, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.
A measure of banks’ reluctance to lend to one another in Europe was little changed from yesterday. The Euribor-OIS spread, the difference between the borrowing benchmark and overnight index swaps, was at 91 basis points.
Overnight deposits at the European Central Bank fell for the first time in five days. Lenders placed 470 billion euros ($598 billion) with the Frankfurt-based ECB yesterday, compared with an all-time high of 486 billion euros Jan 10.
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