Feb. 22 (Bloomberg) -- The cost for European banks to borrow in dollars declined to a six-month low, 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 68 basis points below the euro interbank offered rate at 1:50 p.m. in London, from minus 68.5 yesterday, data compiled by Bloomberg show. The cost has fallen from 114 below Euribor at the start of the year to the lowest since Aug. 5.
The one-year basis swap was 60 basis points less than Euribor from minus 59 yesterday. A basis point is 0.01 percentage point.
The Euribor-OIS spread, the difference between Euribor and overnight indexed swaps, was little changed at 68 basis points, data compiled by Bloomberg show.
Lenders reduced overnight deposits at the ECB yesterday, placing 449 billion euros ($595 billion) with the central bank, down from 464 billion euros on Feb. 20.
Three-month Euribor, the rate banks say they pay for three- month loans in euros, fell to 1.021 percent, from 1.026 percent. One-week Euribor fell to 0.362 percent from 0.364 percent.
The London interbank offered rate, or Libor, for three- month dollar loans fell to 0.492 percent from 0.493 percent.
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