11.7 billion dirhams of surplus liquidity withdrawn by the central bank in August

MEDIA, Abu Dhabi, September 24, 2018 (WAM)

 The Central Bank of UAE raised the pace of withdrawal of excess liquidity in the banking system last August in a trend described by industry experts that it aims to control the movement of liquidity in excess of the need of banks. According to figures from the latest Central Bank reports, the value of liquidity withdrawn during August 2018 was AED 11.7 billion, reversing the approach taken by the Central Bank in July of the same year when it injected liquidity of AED 5.2 billion into the banking system. With the return of the Central Bank to withdraw excess liquidity with the banking system, the balance of certificates of deposit rose to 132.7 billion dirhams at the end of August compared to 121 billion dirhams in July. Certificates of deposit are one of the tools used by the Central Bank to achieve its monetary policy objectives and manage liquidity in the national economy, in addition to other tools that contribute mostly to controlling the movement of cash in the domestic market. The market liquidity management indicator shows that the central bank has started to withdraw a small portion of its liquidity by 2 billion dirhams in February of this year before returning to inject AED 6 billion in March of the same year. During the month of April, the Central Bank continued to inject liquidity into the banking system with a value of 16 billion dirhams before withdrawing about 7 billion dirhams in May. The balance of certificates of deposits reached 125.2 billion dirhams and the balance remained at the same level in June. In July, about 4 billion dirhams were pumped, and the central bank in August withdrew a large amount of liquidity, raising the certificates of deposit back to 132.7 billion dirhams.