The cost for European banks to borrow in dollars fell to the lowest level in more than a year, 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 33 basis points below the euro interbank offered rate, or Euribor, at 8:20 a.m. in London, from minus 35 on Aug. 17. The swap is at the cheapest level since July 25, 2011.
The one-year basis swap was 38 basis points below Euribor from minus 39 on Aug. 17, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.
The three-month euro overnight indexed average, or Eonia, swap was little changed at 7.5 basis points. The European Banking Federation’s overnight benchmark of unsecured lending deals was set at 0.112 percent on Aug. 17, from 0.111 percent the day before.
Banks increased overnight deposits at the Frankfurt-based European Central Bank to 327 billion euros ($404 billion) on Aug. 17 from 322 billion euros the day before.
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