Markets tight as Eibor up 20 points

UAE money markets tightened yesterday as the Emirates Interbank Offered Rate (Eibor) jumped by at least 20 basis points on the back of rising London Interbank Offered Rate (Libor), and decreased liquidity.

"Three-month Eibor is at 4.58 per cent and on Saturday it was at 4.28 per cent," said a dealer from a large local bank.

"International and local liquidity is tight and Libor rate has jumped. On Friday Libor was 4.33 per cent and the day before it was at 4.20 per cent."

Interbank lending rates in the UAE have been rising as liquidity conditions tightened and stock markets crumbled on concerns about fallout from the credit crisis.

One-month Eibor rose to 4.51 per cent, hitting their highest level since January 2008. In September, the UAE central bank said it would offer banks short-term funds through a Dh50 billion facility in an emergency move to ease tensions in money markets as it sought to stave off the global credit crunch.

Meanwhile, Kuwait's interbank interest rates fell, central bank data showed yesterday, after bankers said the central bank had offered fresh funds to shore up confidence and boost liquidity.

Lending rates for one month, three months, six months, one year, two years and three years fell compared to levels on Sunday. The Central Bank of Kuwait has again offered funds to local lenders to shore up confidence, several bankers said in Kuwait City.

One banker said the central bank offered overnight and one-week funds, while another banker said one-month funds were also being offered by the apex bank.

They offer funds for the banks who need them, he said. Volumes of funds were same as offered in previous days, bankers added.

The central bank could not be immediately reached for comment.