European banks’ reluctance to lend to each other held near a three-week low, according to a money- market indicator.
Prices in the forward market for the three-month euro interbank offered rate relative to overnight indexed swaps, known as the FRA/OIS spread, was 32 basis points at 8:23 a.m. in London, according to data compiled by Bloomberg. The measure was 31 yesterday, the lowest since May 7.
The cost for European banks to borrow in dollars held at the lowest levels in more than two weeks. The three-month cross- currency basis swap was little changed at 45 basis points below Euribor, the cheapest since May 11.
The one-year basis swap was little changed at 63 basis points below Euribor. A basis point is 0.01 percentage point.
The Euribor/OIS spread was little changed at 39 basis points.
Lenders cut overnight deposits at the Frankfurt-based European Central Bank yesterday, placing 742 billion euros ($932 billion) from 760 billion euros on May 25.
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