The Central Bank of the United Arab Emirates said on Wednesday it increased its base rate by three quarters of a percentage point to 3%, moving in parallel with the U.S. Federal Reserve's biggest hike since 1994 as its currency is pegged to the dollar.

In Abu Dhabi, the index (.FTFADGI) declined 0.6% as the country's largest lender First Abu Dhabi Bank (FAB.AD) dropped 1.1%, while Aldar Properties (ALDAR.AD) slipped dipped 2.5%.

However, Abu Dhabi National Hotel (ADNH.AD) jumped 2.8% after the Abu Dhabi Securities Exchange implemented increase in company's foreign ownership limit to 100%.

The Abu Dhabi stock market declined as the atmosphere among investors turns to caution while oil prices recorded some volatility. The market could see additional decreases under these conditions, said Eman AlAyyaf, CEO of EA Trading.

Dubai's main stock index (.DFMGI) slipped 0.6%, pressured by a 2.8% fall in blue-chip developer Emaar Properties (EMAR.DU) and 1.9% decrease in budget carrier Air Arabia (AIRA.DU).

Amongh other stock, Shuaa Capital (SHUA.DU) lost 3.1%, its biggest intraday fall since November 11, 2021, after the firm replaced CFO Joachim Mueller with Gunshyam kripa.