ID :
62723
Wed, 05/27/2009 - 13:23
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Shortlink :
https://oananews.org//node/62723
The shortlink copeid
Liquidity gap in UAE narrowing
The difference between commercial bank loans and deposits in the UAE is narrowing and will be "eliminated", Central Bank Governor Sultan Bin Nasser Al Suwaidi said.
Al Suwaidi, speaking to reporters in Abu Dhabi, didn't specify the size of the deficit. He said on May 7 that it had shrunk to about Dh91 billion from Dh110 billion in March as local bank deposits increased.
The so-called liquidity gap had widened as foreign investors pulled money out of Gulf banks because of the global crisis. The UAE in September announced a US$13.6 billion (Dh49.9 billion) fund for the country's banks to boost liquidity. In October, it guaranteed bank deposits and said it would add another US$19 billion into the banking system according to a report in "Bloomberg."
The UAE also responded to the downturn by cutting its key interest rate to 1 per cent. Al Suwaidi said it is a "good rate" for the UAE given the global scenario. He didn't rule out further cuts, saying they would "depend on circumstances".
A rebound in oil prices is helping Arabian Gulf economies emerge faster than others from the global slump. Crude was trading at about US$61 a barrel yesterday, almost double its December low of US$32.40. The International Monetary Fund forecasts that the UAE economy will shrink 0.6 per cent this year, and post a growth of 1.6 per cent in 2010.
"After a period of time, more than six months since introducing those arrangements, the liquidity in the banks is better," Al Suwaidi said in an interview with Al Arabiya television channel yesterday. "Banks are lending even though they are not lending in the same levels during the boom."
Al Suwaidi also said that the UAE isn't "for the time being" in talks to rejoin a planned single Gulf currency. The UAE, which has the second-biggest Arab economy after Saudi Arabia, said on May 20 it would no longer take part in the project.
Al Suwaidi, speaking to reporters in Abu Dhabi, didn't specify the size of the deficit. He said on May 7 that it had shrunk to about Dh91 billion from Dh110 billion in March as local bank deposits increased.
The so-called liquidity gap had widened as foreign investors pulled money out of Gulf banks because of the global crisis. The UAE in September announced a US$13.6 billion (Dh49.9 billion) fund for the country's banks to boost liquidity. In October, it guaranteed bank deposits and said it would add another US$19 billion into the banking system according to a report in "Bloomberg."
The UAE also responded to the downturn by cutting its key interest rate to 1 per cent. Al Suwaidi said it is a "good rate" for the UAE given the global scenario. He didn't rule out further cuts, saying they would "depend on circumstances".
A rebound in oil prices is helping Arabian Gulf economies emerge faster than others from the global slump. Crude was trading at about US$61 a barrel yesterday, almost double its December low of US$32.40. The International Monetary Fund forecasts that the UAE economy will shrink 0.6 per cent this year, and post a growth of 1.6 per cent in 2010.
"After a period of time, more than six months since introducing those arrangements, the liquidity in the banks is better," Al Suwaidi said in an interview with Al Arabiya television channel yesterday. "Banks are lending even though they are not lending in the same levels during the boom."
Al Suwaidi also said that the UAE isn't "for the time being" in talks to rejoin a planned single Gulf currency. The UAE, which has the second-biggest Arab economy after Saudi Arabia, said on May 20 it would no longer take part in the project.
