Dollar Borrowing Costs Fall; Premium to Yen Rate Declines to Two-Month Low

Dollar borrowing costs between banks in London fell to the lowest level since May, narrowing the premium over yen loans to the least in two months.

The London interbank offered rate for dollar loans dropped to 0.48125 percent yesterday, the lowest since May 19, according to the British Bankers’ Association. The rate has declined 5.8 basis points from this year’s high on June 17. Three-month yen Libor was unchanged at 0.24188 percent.

The spread between Libor for three-month dollar and three- month yen loans shrank to 23.937 basis points, the narrowest since May 20. The gap widened to 29.675 basis points on June 17, the most in a year.

The Tokyo three-month interbank offered rate, or Tibor, was unchanged for an eighth day at 0.37308 percent, the lowest since July 7, 2006, according to the Japanese Bankers Association.

To contact the reporter on this story: Saburo Funabiki in Tokyo at sfunabiki@bloomberg.net.

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