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The Emirates Interbank Offered Rate (EIBOR), is the standard or benchmark interest rate, which is specified in UAE dirham, for lending among banks in the UAE market. It is the reference rate that is used by the borrowers and lenders to manage financial transactions in Dubai and the encircling Emirates for loans as mortgages and car loans.
The EIBOR is similar to the LIBOR (London Interbank Offered Rate), that is the localised banking interest rate for currency and fund transfer, as well as to manage for managing liquidity in the interbank marketplace. That is, if a bank encounters a liquidity issue or require money, they can borrow from any other banks at the EIBOR. This rate is also the standard base for mortgages, loans, or other Islamic finance.
The EIBOR is open on every business days at 11:00 a.m in the local UAE time except on all Saturdays. The bank drops two highest and lowest subsidised rates for every tenor or maturity and gets the average of the remaining rates. Tenors extend from overnight and 1 week to 6 - 12 months. Most of the Islamic banks make use of EIBOR rates as standard for finding the rates for specific agreements called ijara, that is related to an instalment leasing agreement.
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