From Riyadh to Sydney, short-term funding markets worldwide are starting to feel the effects of soaring U.S. dollar LIBOR rates.
The surge in recent weeks in this key global short-term financing indicator may have a mostly technical explanation, meaning it's probably not flashing warning signals like it was during the credit crunch or the European sovereign debt crisis. Nonetheless, it's still making funding more costly for some borrowers outside the United States.
The three-month London interbank funding rate (LIBOR) rose to 2.27 percent Wednesday, the highest since 2008. The concern is that the LIBOR blowout may have more room to run, a prospect that borrowers and policymakers in various markets are just beginning to grapple with.
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