Banks’ Cost for Euro-Dollar Payments Conversion at 3-Year High

The premium European banks pay to borrow in dollars through the swaps market increased to the most in almost three years, a sign of concern that officials in the region are struggling to contain the fiscal crisis.

The cost of converting euro-based payments into dollars, as measured by the one-year cross-currency basis swap, rose to as much as 90.65 basis points below the euro interbank offered rate, or Euribor, the widest since Dec. 5, 2008.

The spread was at minus 89.75 basis points as of 7:44 a.m. London time, indicating a higher premium to buy the greenback, according to data compiled by Bloomberg.

Basis swaps allow investors to borrow in one currency and simultaneously lend in another.

To contact the reporter on this story: Keith Jenkins in London at

To contact the editor responsible for this story: Daniel Tilles at

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.