The cost for European banks to borrow in dollars fell from the highest since March, according to a money-markets indicator.

The three-month cross-currency basis swap, the rate banks pay to convert euro interest payments into dollars, was 55.5 basis points below the euro interbank offered rate at 9:42 a.m. in London, according to data compiled by Bloomberg. That’s down from minus 59 yesterday, which was the most expensive since March 19.

The one-year basis swap declined to 64 basis points below Euribor, from minus 67 yesterday. 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 -- were unchanged at 33 basis points.

The Euribor/OIS spread held at 40 basis points. The measure has been little changed for the past two months.

Lenders decreased overnight deposits at the Frankfurt-based European Central Bank yesterday, placing 781 billion euros ($970 billion) from 785 billion euros at the end of last week.

To contact the reporter on this story: Katie Linsell in London at klinsell@bloomberg.net

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