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 17, 2010
The week of April 12 saw fluctuations in LIBOR rates for the US Dollar and the Euro tied to actual or anticipated actions from the currencies’ respective central banks. LIBOR stands for London Interbank Offered Rate and is a filtered average of rates that banks charge each other for unsecured, short-term loans.
Financial Times noted upticks in the Federal Reserve’s overnight rate, which could only go up after its effective 0% rate instigated at the height of the financial crisis to help bolster the U.S. economy. This movement has pushed LIBOR rates higher for the U.S. Dollar since banks like activist policies such as low central bank rates, an approval expressed in lower interbank lending rates and seen in lower LIBOR. In short, American banks are boosting their rates as a sign of unease over the Fed’s reversal—however slight at this time—of its historically low overnight rates. On Monday, April 12, iMarketNews.com noted that Three-Month LIBOR of 0.30041% for the US Dollar was its highest level since September 8, 2009.
| The rise in US Dollar LIBOR gave the Yen the chance to beat the American currency in all maturities for the first time since August 2009, per Bloomberg BusinessWeek. US Dollar LIBOR’s plummet in recent months had usurped the Yen from its traditional position as the globe’s ultra -affordable currency for major transactions. |
Thursday saw US Dollar LIBOR flatten as Fed Chairman Ben Bernanke told Congress that rates will remain low for an “extended period.” Economy recovery in the United States remains modest and uneven, compelling the Fed not to pull back its heavy intervention too quickly. The Wall Street Journal reported that weak employment figures contributed to the Fed’s stated caution.
Meanwhile, Euro LIBOR rates have remained near historic lows as the European Central Bank (ECB) displays a continued commitment to its interventionist policies of low rates and liquidity programs. However, certain events and trends show the possibility of the ECB scaling back its activities, which in turn creates upward pressure on Euro LIBOR. Reuters reported a rise in overnight Euro LIBOR as the ECB reduced excess liquidity. Additional, the successful sale of Greek bonds to help that country’s tottering economy could be a sign of an overall more robust European economic climate. Such an upturn could spur the ECB to raise rates as the prop of cheap money becomes less necessary. To that end, the LIBOR/OIS Spread in Euros contracted, as reported by iMarketNews.com, with Euro LIBOR rates remaining stable but anticipated averages of the central bank’s overnight rate rising as a prediction of a possible tighter money policy.