Bloomberg News

Banks’ Dollar Funding Costs Decline to Two-Week Low in Europe

April 13, 2012

The cost for banks to convert euro interest payments into dollars fell for the third day to the cheapest level in two weeks, according to a money-market indicator.

The three-month cross-currency basis swap was 50 basis points below the euro interbank offered rate at 8:11 a.m. in London from minus 53 yesterday, data compiled by Bloomberg show. The measure was minus 57 on April 10, the most expensive since March 19.

The one-year basis swap was 52 basis points below Euribor from minus 53. A basis point is 0.01 percentage point.

European banks’ reluctance to lend to one another was little changed with the Euribor-OIS spread, the difference between the borrowing benchmark and overnight indexed swaps, at 41 basis points. The measure reached an eight-month low of 40 basis points on April 10.

Lenders increased overnight deposits at the European Central Bank yesterday, placing 706 billion euros ($930 billion) with the Frankfurt-based bank, up from 653 billion euros on April 11.

To contact the reporter on this story: Andrew Reierson in London at areierson1@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net


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