SINGAPORE, Oct 9 (Reuters) - The cost of overnight dollar funding rose as high as 7 percent in Asia on Thursday, reflecting persistent fears in credit markets even after coordinated interest rate cuts by major central banks around the world.
Overnight dollar funds were quoted at 5.5-7 percent in Singapore and around 6.5 percent in Kuala Lumpur, traders said. The rates ranged between 3-6.5 percent in Asia on Wednesday.
"Counterparty risks still remains and that has blocked the lending by banks as risk aversion persists," said Suresh Ramanathan, a strategist at CIMB Investment Bank in Kuala Lumpur.
Last month, overnight dollar rates shot up to 10 percent in Asia, spurred by the high-profile collapse of Lehman Brothers.
The U.S. Federal Reserve cut its benchmark interest rate by half a percentage point to 1.5 percent, and China, the European Central Bank and central banks in Britain, Canada, Sweden and Switzerland followed suit.
The coordinated rate cuts were the latest salvo from policymakers in response to the financial crisis that has forced commercial banks to hoard cash, rather than lending to each other.
On Thursday, three month dollar rates held steady between 4.3 and 5.5 percent in Singapore and were moderately higher in Kuala Lumpur, traders said. (Reporting by Kevin Yao; Editing by Anshuman Daga)
Overnight dollar funds were quoted at 5.5-7 percent in Singapore and around 6.5 percent in Kuala Lumpur, traders said. The rates ranged between 3-6.5 percent in Asia on Wednesday.
"Counterparty risks still remains and that has blocked the lending by banks as risk aversion persists," said Suresh Ramanathan, a strategist at CIMB Investment Bank in Kuala Lumpur.
Last month, overnight dollar rates shot up to 10 percent in Asia, spurred by the high-profile collapse of Lehman Brothers.
The U.S. Federal Reserve cut its benchmark interest rate by half a percentage point to 1.5 percent, and China, the European Central Bank and central banks in Britain, Canada, Sweden and Switzerland followed suit.
The coordinated rate cuts were the latest salvo from policymakers in response to the financial crisis that has forced commercial banks to hoard cash, rather than lending to each other.
On Thursday, three month dollar rates held steady between 4.3 and 5.5 percent in Singapore and were moderately higher in Kuala Lumpur, traders said. (Reporting by Kevin Yao; Editing by Anshuman Daga)
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9:47 AM
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