UAE Central Bank mulls lowering interbank rate
16 Feb 2010
(MENAFN) The Central Bank of the UAE said that its interbank offered rates (EIBOR) do not reflect true market lending rates and it will consult with commercial banks on how to lower them, Reuters reported.
Senior Executive Director at the central bank’s Treasury Department, Hadef Al-Shamsi, said that the EIBOR does not reflect true market rates, and should be discussed thoroughly at the treasury’s next meeting with commercial banks.
However, some commercial bankers said that traded rates in the UAE were only likely to decline if deposits increased.
EIBOR rates, which is based on quotes provided by several banks, have been rising in recent weeks touching six-month highs, as banks chase deposits they need for longer-term funding and as offshore credit has dried up because of uncertainties over Dubai’s debt restructuring.
Al-Shamsi noted that there are several demands and proposals from banks on how to bring the rates down, which would be discussed in the central bank’s next meeting.