The cost for European banks to borrow in dollars held at the lowest levels in two weeks, 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 45 basis points below the euro interbank offered rate at 8:25 a.m. in London, according to data compiled by Bloomberg. The measure was minus 41.5 basis points on May 4, the cheapest since July.
The one-year basis swap was little changed at 65 basis points below Euribor. A basis point is 0.01 percentage point.
Prices in the forward market for three-month Euribor relative to overnight indexed swaps -- known as the FRA/OIS spread -- rose to 33 basis points from 32.5 yesterday. An increase signals banks are less willing to lend.
The Euribor/OIS spread was at 40 basis points from 39 yesterday. The measure has widened after holding near 38 basis points, the lowest since Aug. 1, for 14 days.
Lenders cut overnight deposits at the Frankfurt-based European Central Bank yesterday, placing 761 billion euros ($956 billion) from 766 billion euros the day before.
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