DUBAI(Reuters) – The United Arab Emirates central bank cut its certificate of deposit rates by as much as 20 basis points on Thursday after investors piled pressure on the dollar-pegged dirham currency to appreciate.
The central bank cut its six-month and nine-month certificate of deposit rates by 10 basis points to 4.40 percent and 4.30 percent respectively, the 12-month rate by 15 basis points to 4.15 percent and the 18-month rate by 20 basis points to 4 percent.
The central bank has no benchmark rate. Banks use the certificates as a guide for lending on the interbank market.
Investors have been pressing the central bank to let the dirham appreciate against the U.S. dollar after Governor Sultan Nasser al-Suweidi said last week he was considering dropping the peg and tracking a currency basket.
“The forward prices show that flows into the dirham are very high,” said Simon Williams, HSBC’s senior regional economist.
“Certificate of deposit rates have been cut to discourage further inflows,” he said.