One-month interbank rates in Saudi Arabia rose to 4.06 per cent on 29 September, while in the UAE rates have risen to 4.18750 per cent, up from 3.96 per cent a day earlier.

The continued rise in interbank lending rates indicates that the UAE’s liquidity fund is yet to have any positive effect on the banking market.

The Central Bank of Kuwait has also taken steps to provide some one-week and one-month funds to the market to stabilise the financial market.

The rise in borrowing costs is also reflected on the Dubai International Financial Exchange (DIFX). The HSBC/DIFX sukuk index has seen credit spreads rise by 127 basis points in September, to reach 420 basis points over the London interbank offered rate (Libor).