The Johannesburg Interbank Average Rate (JIBAR) is the benchmark for short-term interest rates in South Africa. It is a benchmark for activity in the South African financial markets, and its calculation arrives from the average of the bid and offer interest rates from eight major banks across the country. It is made up of six terms ranging from one to 12 months in length, but the three-month JIBAR rate is the most commonly used reference in the financial world.
The Financial Sector Conduct Authority (FSCA) launched JIBAR in 1993, creating it to be the benchmark for short-term interest rates in South Africa. It was created with the aim of providing a reliable and consistent measure of the cost of borrowing and lending across the South African financial markets. JIBAR is administered by the Johannesburg Interbank Average Rate Agency (JIBARRA), which is a body created under the auspices of the FSCA and which is responsible for calculating and publishing JIBAR rates.
As the interest rates on JIBAR move, almost all financial activity in South Africa adjusts accordingly. Bank managers use JIBAR rates to set the rates for their certificates of deposit, loans, and futures contracts. Banks base their lending rates off JIBAR because it is widely accepted as a measure of the prevailing market rate. Additionally, South African bond yields are directly affected by the JIBAR rate, as a higher JIBAR rate will translate into higher bond yields, and vice versa.
JIBAR is also used by investors to determine the rates that companies have to pay when they issue debt in the form of bonds or other securities. When the JIBAR rate rises, investors will seek higher yields on the bonds they buy, and companies issuing debt will have to pay higher rates on it. This can affect the credit ratings of companies, since if they have to pay a higher rate, they will need to earn an equally higher return on the debt they issue in order to service it.
JIBAR is an important benchmark rate which is integral to the functioning of the South African financial system. It is critical to all short-term investments and debts and ensures that rates across the sector stay within a given range. It is widely used in South Africa for almost all financial activity, and its movements can have a significant impact on the financial markets.
The Financial Sector Conduct Authority (FSCA) launched JIBAR in 1993, creating it to be the benchmark for short-term interest rates in South Africa. It was created with the aim of providing a reliable and consistent measure of the cost of borrowing and lending across the South African financial markets. JIBAR is administered by the Johannesburg Interbank Average Rate Agency (JIBARRA), which is a body created under the auspices of the FSCA and which is responsible for calculating and publishing JIBAR rates.
As the interest rates on JIBAR move, almost all financial activity in South Africa adjusts accordingly. Bank managers use JIBAR rates to set the rates for their certificates of deposit, loans, and futures contracts. Banks base their lending rates off JIBAR because it is widely accepted as a measure of the prevailing market rate. Additionally, South African bond yields are directly affected by the JIBAR rate, as a higher JIBAR rate will translate into higher bond yields, and vice versa.
JIBAR is also used by investors to determine the rates that companies have to pay when they issue debt in the form of bonds or other securities. When the JIBAR rate rises, investors will seek higher yields on the bonds they buy, and companies issuing debt will have to pay higher rates on it. This can affect the credit ratings of companies, since if they have to pay a higher rate, they will need to earn an equally higher return on the debt they issue in order to service it.
JIBAR is an important benchmark rate which is integral to the functioning of the South African financial system. It is critical to all short-term investments and debts and ensures that rates across the sector stay within a given range. It is widely used in South Africa for almost all financial activity, and its movements can have a significant impact on the financial markets.