LONDON, March 10 (Reuters) - Money markets started to show signs of strain from this week's extreme volatility on Tuesday, pushing one measure of investor demand for dollars to its strongest since
Money Markets Highlight Strongest Foreign Dollar Demand Since April 2025
Surge in Dollar Demand Amid Market Volatility
Market Strain Evident in Cross-Currency Basis Swaps
LONDON, March 10 (Reuters) - Money markets started to show signs of strain from this week's extreme volatility on Tuesday, pushing one measure of investor demand for dollars to its strongest since last April's "Liberation Day" turmoil.
Euro-Dollar Swap Movements
Three-month cross-currency basis swaps for the euro, a derivative that reflects demand for dollars, hit their lowest since last April, at 0.625%, from around 6.4% late on Monday, according to LSEG data. The lower the number, the greater the demand among investors to hold dollars rather than euros.
Historical Context: April 2025 Turmoil
This rate plunged to a low of -6.625% on April 7..
Currency Volatility and Geopolitical Factors
Euro Performance Against the Dollar
The euro itself has lost around 1.5% against the dollar since the U.S. and Israel-led attack on Iran on February 28. Even though volatility has surged across the broader markets, given the dramatic spike in the cost of oil and natural gas, currency volatility has remained relatively contained so far.
(Reporting by Amanda Cooper; Editing by Dhara Ranasinghe)
