Saudi Central Bank Affirms Commitment To Currency Peg Against Dollar
Saudi Arabian Monetary Authority to maintain exchange rate at 3.75 riyals to the dollar
The Saudi Arabian Monetary Authority (SAMA) has affirmed its commitment to a currency peg on the US dollar, despite being in the midst of an economic crisis compounded by low oil prices and the coronavirus pandemic.
The Saudi riyal has been pegged to the US dollar for over three decades.
In a press statement, SAMA said “SAMA remains committed to maintaining the exchange rate at the official rate of 3.75 riyals to the dollar as an anchor of monetary and financial stability.”
A currency devaluation would be too costly for Saudi Arabia and the better option is to adapt to the oil shock through fiscal changes, according to Goldman Sachs Group Inc.
“Unlike a devaluation, fiscal policy can shift the burden of adjustment on those more capable of bearing it through, for example, taxes on luxury goods,” Farouk Soussa, a Goldman Sachs economist, said in a report. “This is not to say there would be no economic or socio-political costs, but we believe these would be lower than in the case of a devaluation.”
The statement from SAMA added: “SAMA's foreign exchange reserves remain sufficient to meet all demands of the national economy for foreign exchange, with foreign exchange reserves covering 43 months of imports and 88 percent of broad money (M3). As such, SAMA affirms that the current exchange rate arrangement is a primary driver for monetary stability and sustainable economic growth.”
On Saturday, Saudi Finance Minister Mohammed Al-Jadaan said officials were looking at “painful” choices and deep cutbacks to contain the fiscal damage - measures likely to hobble the private sector in a country where businesses rely heavily on government contracts. Authorities already announced a 50 billion-riyal ($13.3bn) reduction in budget spending.
UAEs Maseera Acquires Egyptian Fintech ADVA
The move marks a critical milestone in Maseera’s regional expansion strategy Read more
Oman Mandates IBAN For Domestic Transfers From July 2025
The move follows the Oman Central Bank's implementation of the IBAN system for international transfers from March 31, 2... Read more
Egypt And Jordan Thank The European Parliament For New Financial Aid
The European Union members recently approved loans worth $4.4 billion in three instalments to Egypt and $555 million to... Read more
Standard Chartereds SC Ventures To Replicate Asia, Africa SME Model In GCC
SC Ventures to bring its successful SME building strategy in India, South East Asia and Africa to GCC, and plans to rol... Read more
UAE Central Bank Revokes Licence Of Dynamics Insurance Brokers For Regulatory Breaches
Dynamics Insurance Brokers "failed to comply with the licensing terms and requirements issued by the Central Bank and w... Read more
Eid Al Fitr Holidays In The GCC; Dubais 100 Most Influential People; UAE Petrol Prices To Change; Royal Baby Announced – 10 Things You Missed This Week
Eid holidays, the Dubai 100, UAE petrol prices, Royal Baby named, Palm Jebel Ali investments and more top news stories ... Read more