Euribor rates dip but year-long decline fading
FRANKFURT, Nov 26 (Reuters) - Key Euribor bank-to-bank lending rates dipped on Monday after holding steady for three sessions, with the pace of their fall slowing as a year-long downtrend under the weight of excess liquidity in money markets fades. Bank-to-bank lending rates have fallen sharply since last November when European Central Bank plans emerged to flood the banking system with ultra-cheap, three-year cash. But the impact of the excess liquidity has now been largely priced in and there is uncertainty about whether the ECB will cut interest rates further, helping keep rates steady. Three-month Euribor rates, traditionally the main gauge of unsecured bank-to-bank lending, dipped to 0.189 percent from 0.190 percent. The six-month rate also inched lower to 0.349 percent from 0.351 percent and the one-week rate held steady at 0.077 percent. The overnight Eonia rate edged up to 0.074 percent from 0.071 percent. Dollar-priced bank-to-bank Euribor lending rates were mixed, with three-month rates down at 0.60231 percent from 0.60385 percent and one-week rates remaining unchanged at 0.35154 percent. The ECB's decision in July to stop paying interest on overnight deposits paved the way for further declines in euro-denominated rates by removing the 0.25 percent floor for the money market. The amount of excess cash in the euro zone banking system is still extremely high at 634 billion euros, according to Reuters calculations. With that figure set to remain high for the foreseeable future, money market experts have focused on whether the ECB could copy Denmark's example and start charging banks to deposit cash overnight. Policymakers showed initial interest in the idea but some have since expressed reservations. Governing Council member Ewald Nowotny said last month a negative deposit rate was not realistic. Asked about the idea earlier this month, Draghi said: "We haven't discussed (that)." Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 0900 GMT. * For a table of the latest Euribor fixings for terms of one week to one year, double click on * For a table of the previous day's fixings of EONIA swap rates, which show market expectations for future overnight lending rates, double click on * For graphs of historic Euribor and EONIA swap rates, right click on the links in angle brackets below, and select 'Related Graph' 1 week 2 week 3 week 1 month 2 month 3 month 4 month 5 month 6 month 7 month 8 month 9 month 10 month 11 month 1 year ($1 = 0.7867 euros) (Reporting by Frankfurt newsroom)
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