The How, What and Why of Spiraling Borrowing Costs for Aussie Banks
- Repo rates are main driver behind jump in bank borrowing costs
- Spillover from higher U.S. rates, cross-currency plays a part
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Blame it on a piece of financial plumbing.
A gauge of borrowing costs for Australian banks, the three-month bank bill swap rate, has jumped 24 basis points in March, heading for the biggest monthly gain since September 2010. What’s behind this? One of the reasons can be found 10,000 miles away with the rise of U.S. dollar borrowing costs, but another is closer to home: the local repurchase market.