The Central Bank of the UAE has increased its base rate applicable to the overnight deposit facility by 25 basis points, moving it from 3.65% to 3.90%, effective Thursday, September 17, 2026. The Central Bank of the UAE increased its base rate to 3.90%. The decision follows a US Federal Reserve rate hike. The UAE dirham is pegged to the US dollar.
The Central Bank of the UAE (CBUAE) has increased its base rate applicable to the overnight deposit facility by 25 basis points, moving it from 3.65% to 3.90%, effective Thursday, September 17, 2026. This decision follows a 25-basis-point increase in the interest rate on reserve balances by the US Federal Reserve. Given that the UAE dirham is pegged to the US dollar, the CBUAE maintains the base rate as the primary indicator for monetary policy, and it continues to apply its standing credit facilities for short-term liquidity at 50 basis points above the base rate.
As of March 2026, data from India's Ministry of External Affairs indicates approximately 4.326 million Indian citizens reside in the UAE. Many of these individuals are salaried professionals, small-business owners, and homeowners with personal loans, auto finance, or mortgages. The impact on individual borrowing costs will vary based on whether loans are fixed or variable, the specific benchmark such as EIBOR applied, contract reset periods, and individual bank margins. According to the CBUAE's September 16 official EIBOR fixing, overnight EIBOR was 3.40735%, one-month was 3.99246%, three-month was 4.12877%, six-month was 4.20398%, and one-year was 4.81103%.
Borrowers are advised to verify their loan agreements, specifically looking for current annual rates, whether the rate is fixed or variable, and the date of the next reset. For mortgage holders, understanding the fixed-period end date and the subsequent reversion margin is critical. Those considering refinancing or balance transfers should account for processing fees, valuation charges, insurance, and settlement costs rather than focusing solely on the rate difference. Savers are encouraged to monitor revised term-deposit offers, while considering liquidity needs and renewal conditions. Regarding remittances, the CBUAE interest rate hike does not provide a direct or automatic benefit to the AED-INR exchange rate, as the value of the rupee against the dirham remains driven by USD-INR movements, global currency markets, and transfer service provider spreads.
