The cost for European banks to borrow in dollars dropped to the lowest in seven weeks, 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 49 basis points below the euro interbank offered rate at 8:45 a.m. in London from minus 50 on July 13. The cost is the lowest since May 29, according to data compiled by Bloomberg.
The one-year basis swap was little changed at 54 basis points, or 0.54 percentage point, below Euribor. Three-month Euribor, the rate banks say they see each other lending in euros, was set at a record low 0.486 percent on July 13.
An estimate of average overnight borrowing costs in euros, the Eonia OIS swap, was 10.3 basis points from 11 on July 13. The measure dropped nine basis points on July 5 after the European Central Bank lowered its deposit rate to zero. The swap reached a record-low 9.5 basis points on July 12.
The euro overnight indexed average, or Eonia, dropped to a record 11.7 basis points on July 13 from 12.8 the day before.
Banks increased overnight deposits at the Frankfurt-based ECB on July 13, placing 387 billion euros from 366 billion euros the day before. Lenders cut the deposits to the lowest in seven months on July 11 after the deposit rate cut took effect.
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