Bloomberg News

Banks’ Dollar Funding Costs Fall for Second Day in Money Markets

June 06, 2012

The cost for European banks to borrow in dollars fell for a second day, 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 53 basis points below the euro interbank offered rate at 8:20 a.m. in London from minus 56 yesterday, according to data compiled by Bloomberg. That’s the cheapest level since May 31.

The one-year basis swap was 63 basis points below Euribor from minus 64 yesterday. A basis point is 0.01 percentage point.

Predictions in the forward market for three-month Euribor relative to overnight indexed swaps, a gauge of banks’ reluctance to lend, was unchanged at 32.5 basis points, according to the FRA/OIS spread. The Euribor/OIS measure held at 39 basis points.

Lenders increased overnight deposits at the Frankfurt-based European Central Bank yesterday, placing 787 billion euros ($982 billion) from 781 billion euros the day before.

To contact the reporter on this story: Katie Linsell in London at

To contact the editor responsible for this story: Paul Armstrong at

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