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Banks’ Dollar Funding Costs Rise to One-Month High in Europe

The cost for European banks to borrow in dollars rose for the second day to the highest in a month, 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 76 basis points below the euro interbank offered rate at 8:29 a.m. in London, from minus 72 yesterday, data compiled by Bloomberg show. That’s the highest cost since Jan. 31.

The one-year basis swap was 59 basis points less than Euribor from minus 57 yesterday. A basis point is 0.01 percentage point.

The Euribor-OIS spread, the difference between the borrowing benchmark and overnight indexed swaps, was 62 basis points from 62.5 basis points yesterday, data compiled by Bloomberg show.

Lenders increased overnight deposits at the Frankfurt-based European Central Bank yesterday to a record 777 billion euros ($1 trillion), up from 475 billion euros on Feb. 29.

To contact the reporter on this story: Katie Linsell in London at klinsell@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net

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