Higher EIBOR Poses Risks To Already Sluggish Recovery

The rise in the Emirates Interbank Offered Rate (EIBOR) since January 2010 is in divergence to monetary trends elsewhere in the Gulf, and suggests an (understandable) renewed bout of risk aversion in Emirati money markets. The 3-month EIBOR stood at 2.0650% this morning, up from , and looks as though it could go higher, given that the central bank has limited room to intervene. Looking at the three-month deposit rate, the effects of a higher EIBOR have not yet fed through to interbank rates, but could certainly do so over the coming weeks: at 0.41% this morning, the

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