Aug. 31 (Bloomberg) -- The cost for European banks to borrow in dollars declined for the eighth week to the lowest in more than 13 months, 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 30.5 basis points below the euro interbank offered rate, or Euribor, at 8:40 a.m. in London, from minus 34 yesterday. It is the lowest cost since July 22, 2011.
The one-year basis swap was 35 basis points below Euribor from minus 35.5 yesterday. A basis point is 0.01 percentage point.
The Euribor-OIS spread, the difference between the euro interbank offered rate and the overnight indexed swap, was little changed at 21.9 basis points from 21.7 yesterday, the lowest since July 5, 2011.
The three-month Eonia swap was 6.4 basis points, compared with 6.5 yesterday, according to data compiled by Bloomberg. The European Banking Federation’s euro overnight index average, or Eonia, of unsecured lending deals was set at 0.106 percent yesterday from a record low 0.102 the day before.
Banks cut overnight deposits at the Frankfurt-based European Central Bank to 330 billion euros ($413 billion) yesterday, from 334 billion euros the day before.
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