UAE interbank rates have barely reacted to a slew of government and central bank measures to enhance liquidity and improve confidence in the banking system, said Reuters.
The UAE had refrained from matching a Federal Reserve interest rate cut in late October in a move the central bank governor later said was aimed at bringing its official rate (now at 1.5 percent)more in line with its Gulf neighbours.
“No, we will not cut,” UAE Central Bank Governor Sultan Nasser al-Suweidi told reporters in the UAE capital when asked if the country would match a likely Fed rate cut on Tuesday.
The central bank and finance ministry have together launched 120 billion dirhams ($33 billion) worth of emergency funding since September to help the banking system cope with tight credit markets.
The central bank, meanwhile, had been keeping its overnight repurchase rate on par with the Fed funds rate until early October.
Still, the three-month Emirates Interbank Offered Rate <AEIBOR=> has held above 4.4 percent — more than double its level in June.
