The cost for European banks to borrow in dollars dropped to a two-week low, 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 basis points below the euro interbank offered rate at 8:30 a.m. in London from minus 59 yesterday, according to data compiled by Bloomberg. The cost has declined from a three-month high of 69 basis points on July 5.
The one-year basis swap was little changed at 56 basis points, or 0.56 percentage point, below Euribor. Euribor is the rate banks say they see each other lending in euros and is derived from a survey by the European Banking Federation.
The Euribor/OIS spread was little changed at 40 basis points, the lowest since June 14.
The Eonia OIS swap, an estimate of average overnight borrowing costs in euros over the next three months, was little changed at 13 basis points.
Lenders cut overnight deposits at the Frankfurt-based ECB yesterday, placing 791 billion euros ($972 billion) from 795 billion euros on July 6.
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