Today's LIBOR Rates
1 M |
0.25781 |
 |
3 M |
0.29281 |
|
6 M |
0.49363 |
|
1 YR |
0.83488 |
|
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April 02, 2010
Throughout the week, LIBOR rates for the US Dollar and the Euro have moved in divergent directions, with US Dollar LIBOR rising and Euro LIBOR declining to record lows. America and Europe’s respective central banks are considered the prime agents in their currencies’ LIBOR trends. LIBOR stands for London Interbank Offered Rate and is a filtered average of rates that banks charge each other for unsecured, short-term loans.
On Monday, iMarketNews.com reported the widening of the U.S. Dollar LIBOR/OIS Spread by approximately 14 basis points. The LIBOR/OIS compares Three-Month LIBOR to an anticipated monthly average of central bank overnight rates; the wider the spread, the less willingness banks are showing to lend
| Root cause of the new LIBOR/OIS Spread was a Three-Month LIBOR of 0.29013%, its highest level in approximately six months. According to iMarketNews.com, Dollar LIBOR was spiking in anticipation of another hike of the Federal Reserve’s discount rate. During the week, Financial Times and Forex Factory also mentioned the Fed’s pending cessation of bond and security buy-backs as another move that is unsettling to banks and causing them to increase their interbank lending rates, putting more upward pressure on Dollar LIBOR. |
.At the same time, Reuters reported a Three-Month Euro LIBOR poised at a record low of 0.58063%. On Monday, Europe awaited another liquidity injection from the European Central Bank (ECB) due midweek. Tuesday brought a new Euro LIBOR low of 0.58%, as Reuters subsequently reported. Meanwhile, US Dollar LIBOR inched higher to 0.29088%.
On Wednesday, iMarketNews.com reported that the ECB’s Wednesday liquidity action was much smaller than anticipated, an allotment of €17.876 billion in what is promised to be the final 6-month refinance. Still, the LIBOR/OIS Spread in Euros reached a new low of 20.75 basis points, a level reminiscent of the pre-credit crunch spreads of 2007.