March 17, 2020 / 9:53 AM / 4 months ago

Dollar funding costs jump to hit highest since 2011

LONDON, March 17 (Reuters) - The demand for dollars via the currency derivative markets surged on Tuesday in a sign of growing pressures in funding markets as concerns as the coronavirus-induced economic stress intensified.

Three-month euro/dollar cross-currency basis swap spreads rose to around 120 basis points, up from less than 90 on Monday and putting the spread as its widest since late 2011 - the height of the euro zone debt crisis.

A wider spread indicates market participants are willing to pay a higher premium to get access to dollars. The three-month euro/dollar spread was around 20 bps in early March. (Reporting by Tommy Reggiori Wilkes; Editing by Saikat Chatterjee)

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