Dealers anticipate further Eonia volatility

Fasten your seat belts

pavan-wadhwa

For something that had been virtually moribund for the first six months of the year, the euro overnight index average (Eonia) is catching traders out with increasing regularity. Unexpected reductions in excess liquidity in the European market have sent Eonia spiking on several occasions since the end of June, leaving short-term interest rate traders scrambling to reposition themselves. Even more surprisingly for some, Eonia has remained stubbornly high since October 13, confounding those who had

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