Jan. 31 (Bloomberg) -- The cost for European banks to borrow in dollars fell, 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 72 basis points below the euro interbank offered rate at 1 p.m. in London, according to data compiled by Bloomberg. It was minus 75 yesterday.
The one-year basis swap was at 62 basis points less than Euribor, from 63 yesterday. A basis point is 0.01 percentage point.
A measure of banks’ reluctance to lend to one another in Europe fell for a seventh day. The Euribor-OIS spread, the difference between the borrowing benchmark and overnight index swaps, narrowed to 76 basis points from 77 yesterday. It was at 85 basis points on Jan. 20.
Lenders reduced overnight deposits at the European Central Bank, placing 479 billion euros ($631 billion) with the Frankfurt-based ECB yesterday from 489 billion euros on Jan. 27.
Three-month Euribor, the rate banks say they pay for three-month loans in euros, fell for a 29th day to 1.125 percent from 1.131 percent. One-week Euribor dropped to 0.401 percent from 0.404 percent.
The London interbank offered rate, or Libor, for three-month dollar loans fell to 0.542 percent from 0.547 percent.
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