The plunge in oil prices over the past two years forced the government to draw down on its deposits in the banking system…
By Alaa Shahine and Stefania Bianchi: 25 Sept 2016
Saudi Arabia’s central bank stepped up efforts to support lenders in the Arab world’s biggest economy as they grapple with the effects of low oil prices.
The Saudi Arabian Monetary Agency, as the central bank is known, said it decided to give banks about 20 billion riyals ($5.3 billion) in the form of time deposits “on behalf of government entities.” It’s also introducing seven-day and 28-day repurchase agreements, as part of its “supportive monetary policy.”
The plunge in oil prices over the past two years forced the government to draw down on its deposits in the banking system, squeezing domestic liquidity. That’s pushed up the three-month Saudi Interbank Offered Rate, a key benchmark used for pricing loans, to the highest level since 2009. The central bank was said to have offered lenders 15 billion riyals in short-term loans in June to help ease liquidity constraints.