DONIA: UAE Central Bank’s new transactions index to start from 7 Dec

The Central Bank of the UAE (CBUAE) will publish a new index for actual overnight funding transactions denominated in UAE Dirham from 7 Dec. 2021, as part of the new Dirham Monetary Framework implementation plan.
Named DONIA (Dirham Overnight Index Average), the index is the effective overnight reference rate for the Dirham. It is computed as a volume-weighted money market rate for all actual overnight secured and unsecured funding transactions of AED10 million or above contracted by all banks operating in the UAE, captured through the UAE Funds Transfer System (UAEFTS).
It would be published on UAE official working days by 09:30 hours local time on the CBUAE’s website and via Bloomberg (Index Ticker “DONIA”) and Refinitiv Eikon (Instrument Code “DONIA”).
CBUAE said the objective behind the index, named DONIA (Dirham Overnight Index Average), is to provide market participants with data pertinent to the overall state of the actual interbank market and to improve transparency in domestic money market activities.
The bank said it expects that this index will serve as an anchor for banks in determining factors relevant to their daily fixing of interbank rates (EIBOR).
DONIA should also help improve monetary policy transmission in the UAE, underpinned by the transparency in terms of the way it is computed, and the fact that it is a true reflection of actual local interbank market conditions, the bank added.
The bank has no plans to discontinue the EIBOR once the DONIA is published and said DONIA and EIBOR would co-exist in the domestic markets. At this stage, DONIA would not be used to price financial market products offered or structured in the UAE.