UAE cbank sets $200 mln daily limit in loans for CDs

DUBAI, March 9 (Reuters) - The United Arab Emirates central bank said on Sunday it would allow banks to borrow up to $200 million per day against certificates of deposit (CDs) starting from Monday, in a move to respond to the global credit crisis.

UAE banks will be able to borrow dollars for as long as three months or at the maturity of their dirham CDs, whichever is less, the central bank said in a statement on Thursday.

Banks will be able to borrow a maximum of $200 million per day, the central bank said on its Web site.

"This facility is provided to the banks to meet their foreign currency requirements in view of the current credit crisis in the international financial markets," the central bank said, without elaborating.

The UAE, the fifth-largest oil exporter, pegs its dirham currency to the dollar, which hit record lows against the euro and a basket of major currencies last week.

Investors have renewed bets on a revaluation of the dirham as dollar weakness and the prospect of further U.S. Federal Reserve interest rate cuts places pressure on Gulf Arab dollar pegs as inflation rises to near-record peaks across the region.

"Banks who use this facility will not be able to sell dollars to the central bank of the UAE during the period of the funding," it said. (Reporting by Daliah Merzaban; Editing by David Cowell)