Interest rates continue to decline in the domestic market at all times

Abu Dhabi 01-09-2019 / WAM
Interest rates on interbank dirhams (EIBOR) have continued to fall to new levels for several months, according to statistics from the UAE Central Bank.
Interest rates fell to 256 basis points on one-year trading and were followed in the same direction by the 6-month benchmark interest rate, which reached 233 basis points on Sunday, after exceeding 300 basis points in the first half of this year.
The drop in interbank rates followed a decision by the US Federal Reserve to cut interest rates at the end of July. The central bank cut interest rates on its certificates of deposit by 25 basis points effective 1 August 2019.
The certificates of deposit issued by the Central Bank of banks operating in the country are the monetary policy tool through which the effects of changing interest rates are transferred to the banking system in the country.The interest rates on inter-dirham transactions (EBOR) recorded record highs during 2018, as a result of a series of decisions Taken by the US Federal Reserve regarding the increase of interest on the dollar and reached almost four times.
It is noteworthy that the mechanism of calculating the interest rates on the dirham transactions between UAE banks is based on the daily published rates of the largest banks operating in the country, based on the average interest rate charged by banks to lend secured funds to other banks operating in the country.