The Central Bank of the United Arab Emirates (UAE) announced on Wednesday a two-percentage-point cut in its lending rate to 3 percent, the official Emirates News Agency reported.
The UAE Central Bank also lowered the rate on its re-purchase of certificate of deposit (REPO) from 2 percent to 1.5 percent with effect from Wednesday, according to the report.
The move is in line with the new level of interest rate on the U.S. Dollar Federal Funds, Chairman of the bank's board of directors Khalil Mohammed Sherif Folathi was quoted as saying.
The UAE banking sector is strong and the capital reserve has reached 13 percent, much above the 8 percent level approved by the Basel Convention, the official added.
The total mortgage lending by the banks in UAE does not exceed 11 percent of the total assets and 18 percent of the total deposits, which is clearly below the 20 percent level approved by the law, Folathi said.
The UAE Central Bank announced on Sept. 22 that it would set up an emergency lending facility worth 50 billion dirhams (13.6 billion U.S. dollars) for banks operating in the country in a bid to boost local banks' liquidity.
However, the establishment of the facility did not help ease the credit situation in the Gulf country. The one-month Emirates Interbank Offered Rate rose to 4.51875 percent on Monday from 3.64375 percent on Sept. 23.
Source: Xinhua
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