Dollar demand picks up sharply as turmoil in banks rattles investors
4:40 am Friday, March 10th, 2023
LONDON (Reuters) – Demand for U.S. dollars in the currency derivative markets surged on Friday to its highest since mid-December, after a meltdown in U.S. banking stocks ignited a wave of investor risk aversion.
Three-month euro/dollar cross currency basis swap spreads traded as negatively as -17 basis points, the most since December 14, reflecting a pickup in demand for hard cash. They were last trading at -14.
An index of European banks was heading for its biggest one-day fall since last June, as shares in the region’s biggest lenders dropped in sympathy with a steep decline in the value of Wall Street’s biggest lenders on Thursday.
(Reporting by Amanda Cooper; Editing by Dhara Ranasinghe)
