NEW YORK, Sept 30 The cost to swap euros into
dollars for three months in the currency market soared to its
highest levels since 2012 on Friday as concerns grew about
Deutsche Bank's stability.
Deutsche Bank's chief executive sought to
reassure his staff on Friday that Germany's largest lender
remained robust after its shares again fell to record lows,
sending tremors through global financial markets.
Deutsche, which employs around 100,000 people, has been
engulfed by crisis after a demand for up to $14 billion earlier
this month from the U.S. authorities for misselling
The cost to swap euros for dollars, measured by the
three-month London interbank offered interest rate on dollars
over the three-month interest rate on euros, was quoted about
minus 64 basis points on Friday, the highest since July 2012,
according to ICAP.
It was minus 33 basis points on Sept. 8.
The cross currency basis spread is seen as a measure of the
demand of one currency relative to another.
The widening of the basis spread between the euro and the
dollar suggests growing concern about the banking system in the
Banks and hedge funds use the swaps for currency bets, while
U.S. companies use them to hedge their non-dollar denominated
During the global credit crisis, demand for the greenback
soared as dollar lending came to a near halt with the
three-month basis swap spread hitting minus 305 basis points.
At the height of the euro zone crisis in 2011, the gauge was
at minus 160 basis points.
(Reporting by Karen Brettell and Richard Leong, Editing by W