As the Iran issue continues to affect Gulf economies, the Central Bank of the United Arab Emirates (UAE) announced measures to strengthen the liquidity of UAE-listed banks on Wednesday, resulting in a surge in their share prices.
This package, which was specified by the Central Bank of the United Arab Emirates (CBUAE) in a statement dated March 17, comprises term liquidity facilities in both UAE dirhams and US dollars, as well as expanded access to reserve levels of up to thirty percent of the cash reserve requirement. Monica Malik, the chief economist of Abu Dhabi Commercial Bank, stated that the restrictions reflected the central bank’s response to the COVID-19 outbreak.
Once more, we see that this package is intended to ensure that banks have adequate liquidity and that credit continues to flow to the real economy. According to her, “We interpret the package as providing support for macroeconomic stability and broader economic confidence. On Wednesday morning, Emirates NBD and Abu Dhabi Islamic Bank both rose more than 9 percent before reversing their gains. ADCB, on the other hand, experienced gains of up to 6.6 percent.
The Abu Dhabi Bank, the largest bank in the United Arab Emirates by assets, dropped 3.6 percent. Compared with its competitors, FAB is considered a defensive pick, according to Naresh Bilandani, the head of CEEMEA equity research at Jefferies. He also mentioned that the stock continues to be Jefferies’ preferred exposure to the United Arab Emirates. The United Arab Emirates (UAE) stock market has experienced losses in the double digits ever since the United States and Israel commenced their attack on Iran on February 28.
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