Someone, somewhere in Europe appears to have a dollar liquidity problem.
Consider Wednesday’s breaking news:
ECB ALLOTS $60M IN 7-DAY REFI OPERATION AT FIXED 1.18%
And then put in context.
(HT friendly broker).
- On Sept 8th ECB alloted $60m in 7-day operation.
- On Sept 1st ECB alloted $60m in 7-day operation.
- On Aug 25th ECB alloted $40m in 7-day operation.
- On Aug 18th, the ECB alloted $35m in the 7-day operation.
- On 11th Aug – ECB alloted $430M in 7-day dollar liquidity operation at fixed rate 1.18 per cent; (This was the first use of operation in 10 weeks).
You can also track the use of the Fed’s dollar swap facility here.
Now, the ECB’s dollar fund facility has been unused for the most part because it is still cheaper to borrow in the market. (The ECB facility is more expensive because of the initial margin requirement, according to dealers).
But someone, somewhere is happy to pay up. The question is why and who?
Related links:
FX gyrations – FT Alphaville
Central banks restart dollar swaps – FT Alphaville
The dollar shortage problem, evaluated - FT Alphaville
Eurozone banks sip at ECB’s dollar swap facility - FT Alphaville