Cairo – Mubasher: The Saudi Arabian Monetary Agency (SAMA) is planning to withdraw excess liquidity from the banking system to alleviate pressure on the Saudi Riyal as the US interest rates surged.
The Saudi central bank will allow some of the commercial banks’ deposits to mature, governor of SAMA Ahmed Abdulkarim Al-Kholifey said in an interview with Bloomberg.
The reimbursement of these deposits will be in favour of SAMA, instead of the banking system, which will strengthen the main interest rate among banks in a bid to face the hike in the US interest rates, he added.
“In order to protect the exchange rate arrangements that we have at this time, we have to keep under our eyes what is the difference between Libor and Saibor,” said Al-Kholifey.
SAMA has raised interest rates by 25 basis points last month prior to the Federal Reserve System’s decision.
SAMA had also raised the repurchase agreements (repo) to 225 basis points from 200 points, while the reverse repo had been raised to 175 points from 150.
