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UPDATE 1-Fed's swap line hints at little market stress after Brexit

Published 2016-06-30, 05:07 p/m
© Reuters. UPDATE 1-Fed's swap line hints at little market stress after Brexit
USD/JPY
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(New throughout, adds background, analyst comment)
NEW YORK, June 30 (Reuters) - The Federal Reserve provided
just $2 million of liquidity to foreign central banks in the
latest week via its swap lines, the New York Fed said on
Thursday, and analysts said the minuscule pickup suggested
little prolonged stress in global markets after Britain's
surprise vote to leave the European Union.
"Today's data shows no signs of any stress, despite the
significant volatility in foreign exchange markets and others,"
Jefferies & Co.'s money market strategist Tom Simons wrote in a
research note.
The Bank of Japan swapped $2 million with a term of seven
days and a rate of 0.88 percent.
Earlier this week, the sterling GBP= tumbled to a 31-year
low against the dollar near $1.31 following the referendum
outcome. Meanwhile, the greenback touched its lowest level
versus the yen JPY= since late 2013, piercing below 100 yen on
safehaven demand.
The Fed has established swap arrangements with the Bank of
Canada, the Bank of England, the European Central Bank, the
Swiss National Bank, and the Bank of Japan in an effort to
respond to the reemergence of strains in short-term funding
markets in Europe.
During the height of the global credit crunch, the Fed's
dollar swap line reached a peak of $582 billion in December and
averaged $238.35 billion between Dec. 2008 and the end of 2009,
according to Simons.
(The full Fed report can be found at: https://apps.newyorkfed.org/markets/autorates/fxswap
)

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