What is SIBOR?
The broader definition of SIBOR is that SIBOR stands for Singapore Interbank Offered Rate and is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the Singapore wholesale money market (or interbank market). In the Kingdom, it is knowing as the interest rate between banks when borrowing from each other.
What does SIBOR indicate?
Generally, a higher SIBOR might indicate a tighter liquidity within banks, when a bank borrows from another bank this causes the rate to go higher, vise versa, lower SIBOR might indicate a richer liquidity, many corporate loans are Linked to SIBOR which causes a direct exposure and fluctuations on interest rate charged on their loans. SIBOR is different for different periods, a week, a month, three months, six months, or a year.
How does SAIBOR affect the APR and the interest rate on consumer loans and facilities?
The function of the rate charged on consumer loans begins with SIBOR then an added % if any, for example, SIBOR +1%, if SIBOR today is 1.5% this means consumer is charged 2.5% as of today, and it changes as SIBOR moves downwards or upwards.
Is the price of SAIBOR variable?
The difference between repo, reverse repo, Repo (the price of repo agreements): is the lending rate from Saudi Arabian Monetary Agency to Saudi banks. Reverse Repo (Reverse Repo): The interest rate that banks get when depositing their money with SAMA, which is the basis and basis of the "SAIBOR". It represents the base of all interest because it is the basis of interest paid by banks on deposits, Interest on bank deposits is therefore the basis for all interest rates, because the interest on deposits is the cost of basic banks. SAIBOR: The borrowing rate (interest on loans) between Saudi banks for three months. It is determined on a daily basis based on market factors according to a specific and interbank approved mechanism and is used as a primary reference to measure the cost of financing and pricing financing to customers in Saudi Riyal.
Uses of SAIBOR
Used as a basis for measuring the cost of borrowing in the short term. Is used as a reference and an instrument in long-term loans by leaving a variable added to a fixed ratio as assumed by the bank to ensure interest rate fluctuations. Repo is linked to the role and monetary policy of the US and not independent of it. The reference price of interbank financing cost in Saudi Riyal. SAIBOR rates are the basis for individual and corporate loans as well as sovereign bonds in the local market, on the basis of which the interest / profit paid by borrowers to banks is determined. The decline in SAIBOR means lower risk, liquidity and increased banks' confidence in lending. When the rates of SAIBOR rise, so does the profit margin of the banks that have provided loans to customers with variable interest rates. In this case, customers who have chosen fixed interest will be safe from interest rate fluctuations.