Dollar costs plunge in FX swap markets, still elevated onshore

The cost of swapping euros and sterling for dollars in FX swap markets fell on Monday to the lowest in over a decade in a sign of success for central banks' operations, though some other indicators imply money market stress has not wholly dissipated. The swap moves follow a series of policy efforts to squelch the strains in dollar funding markets, including the U.S. Federal Reserve's dollar swap lines for many foreign central banks and offer of temporary 'repo' facilities for others who lack access to such lines. These actions reversed the surge in dollar borrowing costs overseas. Three-month euro-dollar FX swaps touched a 12-year low of minus 65 bps, having swung two weeks back to a 2011 European crisis-era high of more than 150 bps.