UAE Central Bank's Foreign Assets Surge to Dhs700bn in February 2024

The Central Bank of the UAE (CBUAE) reported that its foreign assets exceeded Dhs700 billion in February 2024, marking a significant 40.2% year-on-year increase. This growth was primarily driven by increased current account balances and deposits with banks abroad.

According to the CBUAE, cash deposits increased to Dhs725.8 billion in February 2024, representing an 11% annual increase and a 1.92% monthly growth. Quasi-cash deposits, including term and savings deposits, also surged by 27.4% year-on-year to reach Dhs1.258 trillion. Government deposits saw an 11.1% annual growth, reaching Dhs430.3 billion.

The UAE's gross banking assets attained a record high of Dhs4.2 trillion in February, up from Dhs3.75 trillion a year earlier. This growth was driven by a 2.7% increase in bank deposits, with resident deposits rising by 2.5% and non-resident deposits growing by 5%. Gross credit in UAE banks also saw a 0.9% monthly increase, with growth in government, public, private, and non-banking financial institutions' credit.

The money supply in the UAE expanded by 12.8% year-on-year to Dhs139.4 billion, with Dhs18.2 billion in cash in banks and Dhs121.2 billion in circulating cash outside banks. The monetary base witnessed a remarkable annual growth of 28.3% to stand at Dhs689.5 billion, partly due to the Central Bank's decision to increase banks' reserve requirements for demand deposits from 7% to 11% starting in April 2023.

Why this matters: The significant growth in the UAE Central Bank's foreign assets and the overall banking sector's performance highlight the country's economic resilience and the effectiveness of the Central Bank's regulatory measures in maintaining financial stability and fostering economic growth.

The CBUAE attributed the monthly increases in reserve accounts, current accounts, and overnight deposits for banks to the rise in banks' reserve requirements for demand deposits. "The increase in banks' reserve requirements from 7% to 11% for demand deposits contributed to the rise in reserve accounts, current accounts, and overnight deposits starting April 2023," the Central Bank stated. This financial growth reflects the UAE's commitment to maintaining a robust banking sector and supporting the country's economic development.

Key Takeaways

• UAE central bank's foreign assets exceeded Dhs700 billion in Feb 2024, up 40.2% YoY.
• Cash deposits increased to Dhs725.8 billion in Feb 2024, up 11% YoY and 1.92% MoM.
• UAE's banking assets reached a record high of Dhs4.2 trillion in Feb 2024, up from Dhs3.75 trillion.
• Money supply in UAE expanded by 12.8% YoY to Dhs139.4 billion, with 28.3% growth in monetary base.
• Central bank's increase in reserve requirements for demand deposits contributed to the growth.