The cost for European banks to borrow in dollars dropped to a four-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 50 basis points below the euro interbank offered rate at 8:30 a.m. in London from minus 51 yesterday, according to data compiled by Bloomberg. The cost has fallen from a three-month high of 69 basis points on July 5.
The one-year basis swap was little changed at 54 basis points, or 0.54 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. Three- month Euribor fell to a record at 0.497 percent yesterday from 0.512 percent.
The Euribor/OIS spread was little changed at 39 basis points. The Eonia OIS swap, an estimate of average overnight borrowing costs in euros over the next three months, was little changed at 11 basis points.
The euro overnight indexed average, or Eonia, dropped to a record low at 12.8 basis points yesterday from 13 basis points on July 11.
Lenders increased overnight deposits at the Frankfurt-based ECB yesterday from the lowest level in seven months. Banks in the 17-nation euro region placed 366 billion euros ($446 billion) from 325 billion euros the day before.
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