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Spread betting the Euribor with Spreadex

The Euro Interbank Offered Rate, or Euribor, is a daily reference rate based on the average rates at which banks offer to lend unsecured funds to other banks in the euro wholesale money market.

This rate can differ from the base rate. Placing a financial spread bet on a short-term interest rate may seem counterintuitive at first, as the price of the contract is 100 minus the interest rate.

For example, an interest rate of 2.5% will make a price of 97.5. If you thought interest rates would rise, then you would place a ‘sell’ spread bet on the Euribor 3-month future. Likewise, you would place a ‘buy’ spread bet on the Euribor 3-month future if you thought interest rates would fall.

Spreadex may quote Euribor for a future expiry period at 98.72 – 98.76. This would indicate we think interest rates would be between 1.24% (100 – 98.76) and 1.28% (100 – 98.72) at the point of expiry.

Financial spread betting on interest rates has traditionally been one of the more specialist spread betting markets but has seen an upsurge in popularity given the recent spate of interest rate cuts across the world.