Consider the following swap pricing schedule for currency coupon swaps of euro and dollars.

Currency Coupon Swap Pricing Schedule ($/)					Maturity	Midrate (in $)
					2 years	2.35% (s.a. compounded)
Deduct 5 bps if the bank is paying a fixed rate. Add 5 bps if the bank is receiving a fixed rate. All quotes are against 6-month euro LIBOR flat.

The spot rate is $1.35/. Yield curves are flat and the euro is selling at a 6-month forward premium of 45 bps. Bonds in Germany and United States are quoted as a bond equivalent yield. What is the euro interest rate that corresponds to the 2-year dollar swap mid-rate? Note that interest rates are compounded semiannually.