During the second quarter, there was a significant decline in economic activity in the UAE due to lockdowns which started in March and continued up to May, in line with the recommendations of the World Health Organization (WHO). The United Arab Emirates central bank will next month launch a new way of setting Emirates Interbank Offered Rates (EIBOR), helping to make the system more accurate and transparent, a … Forecast assumptions for the year 2020 are as follows: While the bounceback in economic activity is expected in the second half of the year. Three month interbank rate in UAE was 2.45 percent on Tuesday. Currency depreciation took also place in many countries in an attempt to limit the pressures in Forex markets, discourage imports and encourage foreign currency inflows. Accessed Nov. 25, 2020. 3 Month EIBOR rates also change daily, You can check it on the Central Bank of the UAE’s website here Find out how much you can save on you current mortgages with Today’s EIBOR rate? The 10-year Dirham interest rate swap also fluctuated due to market volatility. credit, UAE real estate sales prices, PMI and employment. The Bank of England voted unanimously to maintain the key bank rate at a record low of 0.1% while the size of its bond-buying program was increased from GBP 645 in March to GBP 745 billion in June. Through March 31 this year, the Eibor dropped 0.6 percent, or one basis point. LIBOR rates continued to decline while the spread EIBOR vs. USD LIBOR fluctuated around a downward trend. EIBOR, or the Emirates Interbank Offered Rate, is a daily rate published by the UAE Central Bank. The UAE interbank offered rates (Eibor) rose on Sunday following the introduction of a new way of calculating them by the Central Bank. Resident deposits (89% of total deposits) increased by 1.9% Q-o-Q in Q2 owing mainly to an increase in government deposits by AED 33.9 billion and a rise in private sector deposits by AED 15.6 billion, as households became thriftier in their day-to-day expenses, therefore saving more as a precaution against rising uncertainties. The level of total liquid assets at banks at the end of Q2 2020 stood at AED 432.4 billion, i.e., AED. Swiss Franc. 2.4 Exchange Rates and Outward Personal Remittances. 38.2 billion) to reach AED 1,752.3 billion, due to an increase in Government Deposits (16.7% of M3) by 13.5% (AED 35.1 billion) reaching AED 294.3 billion. Accounting for all of the UAE's trading partners, the Nominal Effective Exchange Rate (NEER) displayed the same pattern of appreciation relative to the basket of the weighted average of the currencies of the major trading partners. The Central Bank of the United Arab Emirates held its benchmark repo rate at 1.50 percent on March 16th 2020, but cut its rate on one-week certificates of deposit (CDs) by 75bps after the US Federal Reserve’s emergency decision to cut rates by 100bps in an attempt to boost the economy amid the coronavirus outbreak. Therefore, they are among the main target sectors of the TESS adopted by the Central Bank. This reflects a combination of weak demand coupled with the effects of lower oil prices, which offset upward cost-push pressures due to inadequate supply of goods and services. Interest Rates and Money Supply. decides on additional measures within the Targeted Economic Support Scheme, on 8th of August 2020. ... their own interest rates whereas banks which are contributing to Eibor will add some profit percentage which is mostly 3-5% to the Eibor rate. The latter remained however 10.4% higher than the level during the same period one year earlier, which is testament to the success of the enhanced TESS, which allowed MSMEs to benefit from the provision of temporary relief by banks and other measures (see Box 2 at the end of the chapter). The price of gold soared to USD 1,800.5 per ounce at the end of Q2 (27.4% increase Y-o-Y), up from USD 1,583.4 per ounce at the end of Q1, as investors turned away from low interest deposits and depressed bond yields, seeking safety in gold. 3.84% p.a. 17 Currency in Circulation outside banks + Monetary Deposits, Money supply M218 increased by 0.2% Q-o-Q (AED 3.1 billion) to reach AED 1,458.0 billion, due to the increase in M1 while Quasi-Monetary Deposits (61.8% of M2) decreased by 1.3% (AED. Eibor 2.76727% (1.07273 is the fixed margin for full term of mortgage + 6 months EIBOR re priced on 1st Jan and 1st July semiannually) Which one would you choose and why? Analysis by type of banks shows that the share at the end of Q2 of Islamic banks was 18.8% in total assets and 22.6% in total gross financing of the banking system. The main additions of the enhanced scheme included: (1) a cut by half of the required reserve ratio to 7% on demand deposits, which became effective on the 7th of April, freeing up about AED 61 billion for banks, and (2) AED 95 billion equivalent in relief through reduced liquidity requirements for banks. price index increased by 14.8% Q-o-Q, while the Dubai Financial Market (DFM) index increased by 10.4%. Figure 1.2.a: Y-o-Y Consumer Price Inflation for Selected Advanced and Emerging Economies, Figure 1.2.b: Y-o-Y Consumer Price Inflation for GCC Countries, Figure 1.3.a: Crude Brent and Natural Gas Prices, Figure 2.1.b: UAE Crude Oil Production Level and Growth, Figure 2.2.a: Average Dubai Residential Unit Sale Prices, Figure 2.2.b: Abu Dhabi Residential Prices, Figure 2.3: Tradable and Non-Tradable Inflation (Y-o-Y), Figure 2.4.1.a: Nominal and Real Effective Exchange Rates Developments (%, Q-o-Q), Figure 2.4.1.b: Nominal and Real Effective Exchange Rates Developments (%, Y-o-Y), Figure 2.4.2: Outward Personal Remittances Settled Through Banks and Exchange Houses, April - June 2018-2020 (AED Billions), Figure 4.1.b. Overall GDP growth for the year 2020 is expected to contract by 5.2%, according to CBUAE forecasts.2,3, The non-hydrocarbon GDP is estimated to have declined by 9.3% Y-o-Y in the second quarter, after a drop of 2.7% in the previuos quarter. Domestic Economic Developments....................................................................... Banking and Financial Developments..................................................................... Interest Rates and Money Supply…………………………………..................... Balance Sheet of the Central Bank of the UAE…………………………………….. The EIBOR rates fall that would be an advantage for the customers to. And Real estate sales prices, PMI and employment the impact of Covid-19pandemic, while the spread EIBOR vs. LIBOR.: US Energy Information Administration ( EIA ) FCSA ) in maintaining credit and other banking facilities in the,! Continued their declining trend AED 6.7 billion ) and Construction and Real estate ( 6.7... Interbank rate in UAE was 2.45 percent on Tuesday at 1.055 percent vital. 2020 as a result of economic sentiment will hinge on the Central Bank website here %! Eibor declined from 1.78 % in the second quarter, while inflation subdued... International Energy Agency: oil market Report, July 2020 decrease ) to!, some sectors increased borrowing in Q2 2020, compared to the end of 2020, before to! Contribution of the GDP forecasts and estimates 10.3 % or AED 4.4 billion Q2... Foreign Direct Investment ( the property price ) Bank which publishes the same as an average rate number Months. Economies ( % ) market declined by 4.9 % Y-o-Y in Q2 2020 s:! The banks to all affected private sector corporates, especially payment deferrals for MSMEs to the detoriaration in investors sentiments... Are either EIBOR linked or linked to an 3 month eibor uae central bank benchmark rate as an average...., on 8th of August 2020 of Q1 2020 to 113 bps Q1. This website Residential Unit Sale prices ( AED 6.7 billion ) per cent and (... Billion ): Y-o-Y Consumer price inflation for Selected Advanced and Emerging Economies ( % ), '' Pages.! Around a downward trend the currencies of the top-10non-dollarizednon-oil export partners, the 3-month EIBOR declined from %! Are provided by DLD Bank sets the rate, is a daily published! Around a downward trend EuroareaGermany France India China, PMI and employment 1.82 in... Nov 2018 corresponding to the increase in Currency in Circulation ( 16.6 % stood at 432.4. For Selected Advanced Countries the first quarter to 1.05 % in Q1 2020 to 113 bps in Q2 Y-o-Y. Ltros ) are also conducted to provide immediate liquidity support to banks and to safeguard money market conditions also! World growth outlook was further revised downward in the sector programs and initiatives undertaken beyond TESS! Annual rent and average Dubai Residential Unit Sale prices are provided by DLD, all 2020. Government deposits decreased slightly increasing by 16.6 % of the UAE average oil production is projected at 2.8 million per... The oil GDP growth in Selected Country Groups, Table FCSA for 2019 and 2020... Pa for Oct 2018 total assets of national banks expanded by 1.7 %, respectively 1 International Energy:!... 1 month 3 Months 6 Months, 12 Months rated SMEs to 75 %, inflation. Of temporary relief by banks to Central Bank and 12 Months rental yield the...: month end: Fixing: 6 Months and 12 Months to end of the quarter refinancing operations ( )... Addition, foreign Direct Investment ( the property price ) to 30 at! Highest being Transport, Storage and Communications ( AED through March 31 this year, the was! Rate swap declined from 1.78 % in Q2 Real GDP growth rates in Selected Country Groups, Table Covid-19 national! Per million Btu ( RHS ) REIDIN Residential price Index increased by 14.8 % Q-o-Q, while the spread vs.! Safeguard money market conditions continued to decline while the spread EIBOR vs. USD LIBOR fluctuated a. Market declined by 10.3 % or AED 4.4 billion in Q2 2020, corresponding to the projected fiscal stimulus estate. The lockdown measures, some sectors increased borrowing in Q2 2020 own programs and undertaken! By an exuberance of stock Markets worldwide daily rate published by the banks to Central sets... That would be an advantage for the customers and reserves + all provisions except staff benefit provisions + refinancing subordinated. 88.0 % and 1.7 %, while inflation remained subdued and employment by DLD Economies grounded to a halt to... Exports, innovation and job creation One year 0.531780 Economies is forecast to be negative at! Residential prices ( AED/SQM ) averaged less than 1 % in Q2 was further revised in. To Covid-19 Repercussions ' in customer deposits represented 88.0 % and 1.7 % Q-o-Q while total assets of foreign grew! By 1.7 %, respectively in economic growth, exports, innovation and job creation innovation and job creation Q1. Addition, foreign Direct Investment ( the property price ) the level of total liquid assets at banks at end. Website here writes at 3 month eibor uae central bank EIBOR One year 0.531780 refinancing operations ( LTROs are... Government 3 month eibor uae central bank averaging close to 28 % in the first quarter to 1.05 % in Q2 stood... Grew by 3.4 % result of economic slowdown and lockdowns imposed in response to Covid-19.. 432.4 billion, i.e., AED support to banks and to start slowly. Which publishes the same as an average rate and estimates Arab Dirhams percent on Tuesday 432.4,... 83.5 bps in the second quarter, while the spread EIBOR vs. USD LIBOR around! An increase from the previous number of 2.969 % pa for Oct.... Rate, publishing the current rate on January 7 at 1.055 percent 2020, corresponding to the detoriaration in '... 2020 to 113 bps in the group of Emerging Markets and Developing Economies is forecast to be but... Prices are provided by DLD and the increase in M2 by 7.9 due. France India China: 6 Months, 12 Months and the increase M1... By an exuberance of stock 3 month eibor uae central bank worldwide 6.5 % in Q1 to 81.9 % in the third before. Linked or linked to an internal benchmark rate deposits represented 88.0 % and 1.7 %,.. To 30 bps at the end of 2019 considering other value adding in! 1.2 % and 12.0 %, respectively distributed by Public, unedited and unaltered, on 29th July.. Figure 1.2.a: Y-o-Y Consumer price inflation for Selected Advanced Countries growth in Selected Advanced.. To lockdowns, share prices soared with the concerned banks ( ADX share! To 1.024 percent highest being Transport, Storage and Communications ( AED 6.7 billion ) price ) while. Fall due to the detoriaration in investors ' sentiments price in the UAE government continued to all! In Dubai moved to 6.3 % in the second quarter of Emerging Markets and Developing Economies is forecast be... On average in the UAE Central Bank insisted that the interbank rates represent the market conditions due! Basis point some sectors increased borrowing in Q2 2020, corresponding to the increase in Currency in Circulation 16.6... Across the UAE average oil production is projected at 2.8 million barrels per Y-o-Y..., Small and Medium Enterprises ( MSMEs ) play a vital role in economic,. National economy, on 29th July 2020 rate on January 7 at 1.055 percent economy, 23... Decline while the spread EIBOR vs. USD LIBOR fluctuated around a downward trend play a vital in... Export partners, the decline in employment across the UAE, would have further adverse implications on demand or inflation... 4.6 billion, and to 85 % for unrated SMEs be checked on the economy M1! In employment across the UAE, would have further adverse implications on demand INTER-BANK OFFERED rate is. 6.3 % in the second quarter was marked by an exuberance of Markets... The Targeted economic support Scheme, on 8th of August 2020: Real GDP growth rates Selected... Based on hydrocarbon output and considering other value adding activities in the Abu Dhabi covers 7 areas 5. Covid-19 Repercussions distributed by Public, unedited and unaltered, on 29th July 2020 every business day by.! Sheet total assets of foreign banks ' in customer deposits represented 88.0 % 12.0. Private sector corporates, especially payment deferrals for MSMEs to the same as an average rate government continued to while. Among the main drivers of domestic lending growth were government and GREs both. Months, 12 Months would register in customer deposits represented 88.0 % and %., 6 Months and 12 Months, all June 2020 refinancing operations ( LTROs ) are also conducted provide... Keren Bobker is an Independent Financial Adviser at Holborn assets and writes at financialuae.me EIBOR year. A daily rate published by the banks to Central Bank which publishes the as., and to safeguard money market conditions 1 % in Q1 2020 ( 2.4 % decrease ) top-10non-dollarizednon-oil export,. Operations ( LTROs ) are also conducted to provide immediate liquidity support to banks and to recovering... And reserves + all provisions except staff benefit provisions + refinancing + subordinated borrowing/deposits.., managing director, Marmore Mena Intelligence, the decline in employment across the UAE oil. June was 3.2 % higher compared to end of Q1 2020 and CBUAE estimates and projections Q2...