The cost for European banks to borrow in dollars held at the lowest in a year, 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 little changed at 39.5 basis points below the euro interbank offered rate at 8:30 a.m. in London, data compiled by Bloomberg show. The cost is the cheapest since July 26, 2011.
The one-year basis swap was 42.5 basis points, or 0.425 percentage point, below Euribor from minus 43 on Aug. 3.
The European Banking Federation’s euro overnight indexed average, or Eonia, was set at 11.1 basis points on Aug. 3 from 10.9 the day before. An estimate of overnight borrowing costs over the next three months, the Eonia OIS swap, was unchanged at 8.6 basis points, the highest since July 26.
Banks cut overnight deposits at the European Central Bank to a seven-month low, placing 300 billion euros ($371 billion) with the Frankfurt-based ECB on Aug. 3 from 324 billion euros the day before.
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