Thursday, December 17, 2015

UAE raises deposit rate following Fed hike

    The Central Bank of the UAE (CBUAE), the central bank of the United Arab Emirates, has raised its deposit rates by 25 basis points, saying this was "in line with the increase in the interest rates on US Dollar, following the Federal Reserve Board's decision to increase the Federal Funds rate by 25 basis points at its meeting on December 16, 2015."
     The central bank said in a statement that its certificates of deposits, which are issued to commercial banks, is the operating monetary policy instrument through which changes in interest rates are transmitted to the UAE banking system.
    The CBUAE maintains a fixed peg of the dirham to the U.S. dollar, which means its rates have to be aligned to the U.S. dollar across the maturity curve. The dirham was trading at 3.67 to the U.S. dollar today.
    Last month the governor of central bank Mubarak Rashid al-Mansouri said there would be an "appropriate adjustment" in interest rates following any rate hike in the U.S.



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