European banks’ reluctance to lend to one another fell to the lowest in seven months, according to a money-market indicator.
The Euribor-OIS spread, the difference between the euro interbank offered rate and overnight indexed swaps, was 53 basis points at 8:30 a.m. in London from 54 yesterday, data compiled by Bloomberg show. That’s the lowest since Aug. 5.
The cost for banks to convert euro interest payments into dollars fell to the lowest level in seven months. The three- month cross-currency basis swap was 63 basis points below Euribor from minus 63.5 yesterday.
The one-year basis swap was little changed at 53 basis points less than Euribor. A basis point is 0.01 percentage point.
Lenders cut overnight deposits at the ECB for the fifth day yesterday to 795 billion euros, down from 798 billion euros on March 9.
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