The cost for European banks to borrow in dollars declined to the lowest in more than a year, according to a money-markets indicator.
The three-month cross-currency basis swap, the rate banks pay to convert euro interest payments into U.S. dollars, was 32.5 basis points below the euro interbank offered rate, or Euribor, at 9:16 a.m. in London, from minus 35 basis points yesterday. The cost is the lowest since July 22, 2011.
The one-year basis swap was little changed at 39 basis points below Euribor, the lowest cost since Aug. 3, 2011, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.
The three-month Eonia swap was little changed at 7.2 basis points. The European Banking Federation’s euro overnight indexed average of unsecured lending deals, known as Eonia, was set at 0.11 percent yesterday from 0.112 percent the day before.
Banks increased overnight deposits at the Frankfurt-based European Central Bank to 329 billion euros ($406 billion) yesterday, from 326 billion euros the day before.