Money Parked At ECB Remains At Elevated Level, Borrowing Falls
fxbom.com
05:07 PM
FRANKFURT -(Dow Jones)- The amount of money commercial banks parked at the European Central Bank rose Friday as market uncertainties persisted about Europe’s credit crisis and the global growth outlook.
Banks deposited EUR80.214 billion at the ECB Friday, above Thursday’s 67.044 billion. Deposits to the central bank hit a 2011 peak of EUR145.217 billion a week ago. They subsequently fell back, but have been climbing again since the middle of the week.
“For now, the panic element has been removed from the market, but not the pessimism. This suggests that any revival in risk appetite will be difficult to sustain,” said Daragh Maher, senior currency strategist at CA CIB in a research note.
The ECB’s bond-buying program calmed market fears last week, as did the U.S. Federal Reserve’s promise to keep interest rates low through mid-2013 and Swiss and Japanese authorities’ currency-market interventions.
Overnight borrowing from the ECB, meanwhile, fell back to negligible levels after a jump last week due to the end of the ECB’s reserve period and renewed fears over European banks’ exposure to Greek debt. The sharp fall could also reflect the relative stability of financial markets at the end of last week.
The grim outlook for global growth has pushed some investment banks to revise their growth outlook. Deutsche Bank’s economists said they have lowered their already modest view on euro-zone gross domestic product growth for 2012 to 0.8% from 1.5% previously.
They also expect the ECB to keep its key interest rate on hold until the end of 2012 at least.
-By Margit Feher and William Launder, Dow Jones Newswires; +49 69 29725 509 ; margit.feher@dowjones.com
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