LONDON — Dollar borrowing costs in the foreign exchange swap markets retreated further on Monday, with swap rates against the euro and pound falling to their lowest levels in more than a decade. These moves indicate recent emergency actions by global central banks have managed to squelch a growing dollar shortage in these markets. Costs dropped after the U.S. Federal Reserve stepped in, first renewing swap lines with major central banks, then extending similar facilities to other central banks, and finally establishing a new temporary 'repo' facility. "Policies put in place to settle markets have created new distortions of their own," Natwest market strategists said in a note. "Judging from cross-currency basis swaps, there has been a swing from an acute dollar shortage to an oversupply."

Source: International New York Times April 06, 2020 08:26 UTC