The UAE Central Bank launches a new indicator for actual overnight...
The UAE Central Bank launches a new indicator for actual overnight financing transactions
The Central Bank of the United Arab Emirates intends to launch a new index for actual overnight financing transactions, denominated in dirhams, as of December 7th.
The index aims to provide market participants with data related to the overall and actual situation of the interbank market, and to improve transparency in the activities of local money markets.
And according to the Emirates News Agency (WAM) yesterday, Sunday, the decision comes as part of the plan to implement the new framework for monetary operations in the UAE dirham, pointing out that the index bears the name “Donia”, which is an abbreviation for “the average dirham index for one night” in English.
Khalid Muhammad Balama, Governor of the Central Bank, said, “The launch of a minimum index contributes to facilitating the implementation of the new framework for monetary operations in dirhams, and we are confident that the publication of this new reference index will provide more transparency to the money markets in dirhams, and will help the Central Bank to ensure that the prices of the money markets are in line tonight. one with the prevailing base rate.
And the “Dunya” index is the average effective reference price of the dirham for one night, and the index is calculated as the average price of the money market weighted by volume for all actual secured and unsecured financing transactions, amounting to 10 million dirhams or more, which take place between banks operating in the country through the UAE system. to transfer money.
The Central Bank expects that this indicator will serve as a basis on which banks can determine the factors related to the daily determination of interbank interest rates (EIBOR), and will also help in improving the mechanisms of monetary policy enforcement in the country, as it is based on transparency in terms of the way in which It is calculated, and because it more accurately reflects the actual conditions of the local interbank transactions market.
The Central Bank confirms that there is currently no plan to stop the “EIBOR” index as soon as the “Dunya” index is published, as the indices will be located in the local markets, and it is not permissible at this stage to use the “Dunya” index to price the financial market products offered or structured in the country.
The index aims to provide market participants with data related to the overall and actual situation of the interbank market, and to improve transparency in the activities of local money markets.
And according to the Emirates News Agency (WAM) yesterday, Sunday, the decision comes as part of the plan to implement the new framework for monetary operations in the UAE dirham, pointing out that the index bears the name “Donia”, which is an abbreviation for “the average dirham index for one night” in English.
Khalid Muhammad Balama, Governor of the Central Bank, said, “The launch of a minimum index contributes to facilitating the implementation of the new framework for monetary operations in dirhams, and we are confident that the publication of this new reference index will provide more transparency to the money markets in dirhams, and will help the Central Bank to ensure that the prices of the money markets are in line tonight. one with the prevailing base rate.
And the “Dunya” index is the average effective reference price of the dirham for one night, and the index is calculated as the average price of the money market weighted by volume for all actual secured and unsecured financing transactions, amounting to 10 million dirhams or more, which take place between banks operating in the country through the UAE system. to transfer money.
The Central Bank expects that this indicator will serve as a basis on which banks can determine the factors related to the daily determination of interbank interest rates (EIBOR), and will also help in improving the mechanisms of monetary policy enforcement in the country, as it is based on transparency in terms of the way in which It is calculated, and because it more accurately reflects the actual conditions of the local interbank transactions market.
The Central Bank confirms that there is currently no plan to stop the “EIBOR” index as soon as the “Dunya” index is published, as the indices will be located in the local markets, and it is not permissible at this stage to use the “Dunya” index to price the financial market products offered or structured in the country.
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