In its efforts to curb inflation, the Saudi Arabian monetary agency, Sama, has bought SR5.2bn of foreign currency in the second quarter of 2008 to absorb liquidity in the Saudi Riyal and ease inflation which reached 10.6%.
Sama’s foreign investments grew by 6.6% to reach SR1.5 trillion during the month of July as the growth rate since the beginning of the year reached 33%.
Despite increasing reports about inflation in the country, officials in Sama appear unworried, saying that the economy appears capable of containing inflation in the long run.
Officials believe that inflation will not affect the country’s economic growth.
A Sama report describing the monetary policy for the second quarter of 2008 indicated that Sama continued to follow a monetary policy aimed at stabilizing prices and support local economic activities.
Sama also decided to increase the legal reserves on assets under demand from 10% to 13% in the second quarter of 2008.
The reserves on saving assets have also been raised from 2% to 4%.
Interest rates on assets at local banks increased considerably in the second quarter to 3.46% from 2.26% in the first quarter.
Sama’s investments also rose during July by 6.6% to SR1.5 trillion, while the growth rate reached 33%.
Saudi banks’ foreign investments fell by 5% last month to SR12.1bn, and by 72% overall since the beginning of the year.
Loans and credit facilities extended by local banks rose in the second quarter of 2008 by 7.2% (SR61.3bn) to reach SR909.5bn compared to 11.5% (SR87.2bn) in the previous quarter, registering an annual growth of 35.0% (SR235.9bn).
This represents 116.1% of the total assets compared to 104.9% last year.
The private sector owes commercial banks SR690.3bn, up 10.3% in the second quarter of 2008 compared to 8.3% during the previous quarter.
The report noted that short term credit jumped by 13.8% (SR52.3bn) to reach SR431.7bn compare to 9.2% (SR31.9bn) during the previous quarter.
The medium term credit also rose by 6.6% (SR6.1bn) to reach SR98bn compare to 10.5% (SR8.7bn) during the previous quarter.
The long term credit has also jumped by 3.1% (SR5.2bn) to reach SR174.5bn compared to 3.2% (SR5.3bn) during the previous quarter.
Tuesday, September 9- 2008 @ 9:43 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.