The UAE’s Central Bank is trying to keep interbank rates low and is going to continue to meet with commercial banks in an effort to maintain a lower rate analysts stated yesterday.
Last month the Central Bank stated that the Emirates Interbank Offered Rate offered by more than twelve banks did not give a true picture of the current market lending rates. That was when they made the decision to liaise with banks in an effort to bring these rates down.
Sources have revealed that the Central bank requested that a number of Banks reduce this rate but they refused saying that the market itself should determine the rates and they should not be adjusted for any other reason. The Central Bank has since declined to comment on speculation about this meeting.
This week short term rates did decrease after being high for the first two quarters and this was due to the Dubai government revealing its plans for the Dubai World restructuring deal.
However other than this development analysts, bankers and investors all agree that the banking situation is stagnant at the moment as credit is hard to access which means funding is scarce and in this environment rates are likely to continue to rise.Paul Holdsworth, Staff Writer, Gulf Jobs Market News