ABU DHABI- The total cumulative balance of letters of guarantee and other credit facilities provided by banks and other business entities in the UAE significantly grew to AED4.533 trillion in February, 2020, an increase of AED186 billion, or 4.3 percent approximately, from AED4.347 trillion in January, statistics by the Central bank of the United Arab Emirates have shown.
This significant increase in credit facilities is reflective of the continued business momentum maintained by various economic sectors in the UAE with overseas partners despite the global slowdown witnessed worldwide. A letter of guarantee is a type of contract issued by a bank on behalf of a customer who has entered a contract to purchase goods from a supplier.
It lets the supplier know that they will be paid, even if the customer of the bank defaults.
The apex bank’s figures show that the balance of foreign currency derivatives soared to AED797.2 billion in February 2020, against AED766.3 in January of the same year. The balance of interest returns on foreign exchange derivatives likewise increased from AED2.763 trillion in January to circa AED2.928 trillion in February. The value of letters of liability provided by banks stood at AED238.6 in the reference period. The total balance of letters of guarantee at the end of February valued about AED382.7 billion while the balance of letters of credit amounted to AED103.8 billion.
© Copyright Emirates News Agency (WAM) 2020.