April 18 (Bloomberg) -- The cost for European banks to borrow in dollars fell to the lowest in more than eight 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 49 basis points below the euro interbank offered rate at 8:10 a.m. in London from minus 52 yesterday, data compiled by Bloomberg show. The measure has fallen from 114 basis points at the start of the year to the cheapest cost since Aug. 1.
The one-year basis swap was at 55 basis points less than Euribor from minus 56 yesterday. A basis point is 0.01 percentage point.
The Euribor-OIS spread, the difference between the borrowing benchmark and overnight indexed swaps, was at 40.5 basis points from 41 yesterday. The measure of banks’ reluctance to lend to one another reached an eight-month low at 40 basis points on April 10, the lowest since Aug. 1.
Lenders increased overnight deposits at the Frankfurt-based European Central Bank yesterday, placing 758 billion euros ($992 billion) with the ECB from 745 billion euros the day before.
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