Johannesburg Interbank Average Rate (JIBAR)

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Definition of 'Johannesburg Interbank Average Rate (JIBAR)'

The Johannesburg Interbank Average Rate (JIBAR) is an interest rate benchmark used in South Africa. It is calculated as the average of the closing bid and ask rates for unsecured lending between banks in the Johannesburg Interbank Market (JIM). The JIBAR is published by the South African Reserve Bank (SARB) on a daily basis.

The JIBAR is used as a reference rate for a variety of financial products, including loans, bonds, and derivatives. It is also used as a benchmark for setting interest rates on savings accounts and other deposit products.

The JIBAR is a floating rate, which means that it changes over time in response to changes in the supply and demand for funds in the JIM. The JIBAR is typically higher than the repo rate, which is the interest rate at which the SARB lends money to banks.

The JIBAR is a useful tool for financial institutions and investors to compare the cost of borrowing and lending funds. It is also a useful tool for the SARB to monitor the state of the financial system.

The JIBAR is not without its limitations. One limitation is that it is based on a small sample of transactions. This can make it volatile and susceptible to manipulation. Another limitation is that it does not reflect the cost of borrowing for all types of borrowers. For example, the JIBAR does not reflect the cost of borrowing for small businesses or for consumers.

Despite its limitations, the JIBAR is an important benchmark for the South African financial system. It is used by a wide range of market participants and is a key indicator of the state of the economy.

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