The cost for European banks to borrow in dollars fell for the fourth day to the lowest in 7 1/2 months, 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 53 basis points below the euro interbank offered rate at 11:30 a.m. in London, from minus 54 yesterday, data compiled by Bloomberg show. That’s the cheapest cost since Aug. 1.
The one-year basis swap was little changed at 43 basis points less than Euribor, the cheapest since Aug. 5. A basis point is 0.01 percentage point.
The Euribor-OIS spread, the difference between the borrowing benchmark and overnight indexed swaps, is 46 basis points, the lowest since Aug. 3. The measure has declined from 95 basis points at the start of the year.
Lenders cut overnight deposits at the Frankfurt-based European Central Bank yesterday, placing 755 billion euros ($994 billion) with the ECB from 769 billion euros on March 20.
Three-month Euribor, the rate banks say they pay for three- month loans in euros, fell to 0.817 percent from 0.824 percent. One-week Euribor rose to 0.320 percent from 0.316 percent.