4.17% interest rate on long-term trade-offs during the last quarter of 2018

19-03-2019 Media in\ Abu Dhabi
Interest rates on long-term swaps on the 10-year dirham were 4.17 percent in the fourth quarter of 2018 compared to 3.9 percent in the first half of the same year, according to figures released by the UAE Central Bank.
After peaking at 4.42% in the second week of October, interest rates on this type of exchange fell by 25 basis points until the end of December. The decline in the interest rate on the swap in the fourth quarter of 2018 also extended to the US dollar and other currencies despite the increasing global volatility And associated risks.
The explanation for this, according to the central bank, is that markets expected the Federal Reserve to stop raising interest rates as a result of its decision in December 2018, while inflation remains below the target in the euro area and in Japan.
However, the difference between interest rates on 10-year swaps for the dirham versus exchange rates on the US dollar increased from 1.15% in October to the first week of December to 1.40% at the end of last year.
The Ministry of Finance issued the Public Debt Law No. 9 of 2018, which allowed for the first time the Ministry to issue public debt instruments in dirhams in the local stock markets, paving the way for the Central Bank to carry out open market operations actively and until the issuance of public debt instruments to develop the yield curve Interest rates on swaps are the only available prices that currently reflect the yield on long-term securities.
According to the criteria, interest rate swaps are the exchange of variable interest rates at fixed interest rates on a fixed amount linked to an interest rate and often the interbank Offered Rate in London.