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

Thu Jun 30, 2016 5:07pm EDT
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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 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 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: here ) (Reporting by Richard Leong; Editing by David Gregorio)