NEW YORK (Reuters) – The cost of raising U.S. dollar funds in the Japanese and European foreign exchange swaps market narrowed considerably on Thursday in favor of the other two currencies, suggesting less demand for the greenback amid the coronavirus pandemic.
Currency spreads in yen and euro swaps, the two most liquid markets, widened sharply amid a scramble for dollar funding by foreign banks and companies.
But a slew of measures from the Federal Reserve last month to ensure there was no global dollar shortage alleviated some funding pressure.
On Thursday, euro/dollar three-month swaps widened considerably in favor of the euro to nearly 59 basis points
The yen/dollar three-month swaps also widened in favor of the yen to nearly 19 basis points
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama)
