Interbank Rate Trend

Interbank Rate Regional Overview

Get the latest insights on price movement and trend analysis of Interbank Rate in different regions across the world (Asia, Europe, North America, Latin America, and the Middle East & Africa).

Interbank Rates Trend for the First Half of 2023

Interbank Rates are the rates at which major global banks lend to one another in the international interbank market. The Interbank Rates were usually measured as LIBOR (London Interbank offered rate), which was a globally accepted benchmark interest rate that was published on a daily basis by Intercontinental Exchange (ICE). But the calculations were always under question, so as of June 30th, 2023, the LIBOR has been phased out and replaced by the Secured Overnight Financing Rate (SOFR).
 

Interbank Rate Chart

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In Q1’23, the international claims have risen by 619 billion USD, and the credit loans and holdings of debt securities have risen by 921 billion USD. However, the YOY growth in cross-border credit has slowed during the said period.

Analyst Insight

According to Procurement Resource, the global Interbank Rates will continue to fluctuate amidst the current events of geoeconomic and geopolitical importance.
 

Interbank Rates Trend for the Second Half of 2022

The interest rate on the interbank overnight borrowing of reserves is called the Fed Fund Rate. Financial conditions have become difficult internationally, first because of the COVID-19 pandemic and then the war between Russia and Ukraine. Inflation mounted as global trade suffered amidst curtailed supply chains. Interbank rates, too, rose along with domestic interest rates. Overall, rising interbank rates were observed.

Analyst insight

According to Procurement Resource, interbank rates are likely to rise in the coming months as well because of the rising global inflation.
 

Interbank Rate Trend for the First Half of 2022

In India, the interbank rate kept rising steadily. The rate averaged 4.25% in April and went on to 5.17% towards the end of June 2022. In China, the interbank rate recorded an oscillating trend, however, in all it was towards the lower end. It fluctuated between 2.47-3.08% during the said period.

In Europe, the Euribor ( Euro interbank offered rate) for 6 months averaged between 0.291-0.273 % while that of 1 year fluctuated between 1.124-1.089% towards the end of said period.

In the US, the global pandemic caused a drop in the immediate call money/interbank rate. It went from 1.58% in Feb’22 to under 0.05% just a few months after. In March 2022, the rate averaged 0.2% with no signs of increasing.
 

Interbank Rate Trend For the Fourth Quarter of 2021

Asia

In India, the call money rate, which banks use to lend to one another, reached 4.55% during March 2021 trade. Additionally, it reached a high of 4.65%. In light of LIBOR's impending discontinuation, the RBI stated that any commonly accepted interbank rate to the currency of lending may be used as an index post-discontinuation.

According to information from the Shanghai Commercial Paper Exchange, the interest rate Chinese banks paid to loan from other banks using corporate paper as collateral increased above 2.6 % late last week. It fell to near-zero levels last month as banks competed to lend money to one another in order to meet government lending quotas.

Europe

While some European countries, such as Switzerland, Germany, and Italy, had negative interbank interest rates, others, such as Turkey, Ukraine, and Russia, had rates of 15.63 %, 11.61 %, and 10.59 % in the first quarter of 2022, respectively.

In a significant move aimed at crippling Russia's economy, the US and key allies, including the EU and the UK, decided to cut key sanctioned Russian banks off from the global banking system SWIFT and impose restrictive measures on the country's central bank in rebuttal to Moscow's invasion of Ukraine. SWIFT, otherwise known as the Society for Worldwide Interbank Financial Telecommunication. It is the primary banking messaging service in the world, connecting approximately 11,000 banks and institutions in over 200 countries.

North America

In the last quarter of the year 2021, the interbank rates remained stagnant at 0.08% in the months of October, November and December.

Latin America

The interbank rate in Argentina increased to 31.44 % in January from 30.56 % in December of 2021. In the final quarter, the peak was achieved in November 2021 when the rate in Argentina was 31.14%. Further, the interest rate in Brazil was 5.39% while that in Mexico was 6.02% in the fourth quarter.
 

Interbank Rate Trend For First, Second and Third Quarters of 2021

Asia

The rates in India increased continuously from Jan 2021 to Feb 2021, staying constant in March 2021 at 3.75%.  With a slight decrease in early April and May, the trend continued till September 2021, when the rates were evaluated at 3.8%.

Europe

In 2021, European banks and other related financial firms had to pay to keep their excess reserves stored at the central bank, rather than receiving some positive interest income. The interbank rates were negative throughout the year. The year started with -0.478% in January 2021 and was at -0.485% in September 2021.

North America

The trend of stagnant interbank rates was carried from the year 2020 well into 2021,with 0.1% being the highest in July 2021.

Latin America

The rates in Argentina increased throughout the first quarter and well into the second one as well, with May 2021 rates reaching the apex at 32.29 %. The trend discontinued in the latter two quarters as interest rates decreased, reaching 31.46 % in September 2021.
 

Interbank Rate Trend For the Year 2020

Asia

Interest rates in the interbank money market increased in March 2020, as risk aversion toward lending to weaker banks and a tendency to hoard cash in anticipation of further financial market stress gained traction amid a general decline in asset values.

The spread between the repo rate, the rate at which the RBI gives to banks, and the call rate, a key indicator of market stability, widened to as much as 35 basis points, triggering a new round of liquidity-enhancing measures by the cent. During normal times, the spread is approximately five basis points or less. Until February, banks were lending to one another at rates lower than the repo rate, a reflection of the market's excess liquidity.

However, despite the RBI's supplemental liquidity measures, the spread increased above the policy rate as banks became more risk averse due to concerns about market seizing up due to capital flight. Credit dislocation was accelerating in the face of Covid-19 uncertainty.

In November 2020, the Reserve Bank of India also announced that it would proceed with its plan to develop a new benchmark to replace the Mumbai Interbank Forward Outright Rate (MIFOR), as the London Interbank Offered Rate (LIBOR), the global reference point for borrowing, was set to expire at the end of 2021. India's exposure to LIBOR is estimated to be around USD 331 billion in the shape of borrowings, bonds, FCNR deposits, and derivative contracts.

North America

The interbank rates fell from 1.55% in January 2020 to 0.05% in May 2020. It remained more or less the same for the rest of the year after that.

Latin America

The interbank rates in Argentina progressively decreased from January 2020 (39.48%) to March 2020 (30.13%). They hit an all-time low in April 2020 amounting to 8.02%. This low was attributed to the panic caused by the coronavirus pandemic. They only increased after this fiasco. They were evaluated at 27.46% in December 2020.

Procurement Resource provides latest prices of Interbank Rate. Each price database is tied to a user-friendly graphing tool dating back to 2014, which provides a range of functionalities: configuration of price series over user defined time period; comparison of product movements across countries; customisation of price currencies and unit; extraction of price data as excel files to be used offline.