THE GOVERNOR OF THE SAUDI CENTRAL BANK EXPLAINS THE REASON FOR THE DECLINE IN FOREIGN EXCHANGE RESERVES


The Governor of the Saudi Central Bank explains the reason for the decline in foreign exchange reserves

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Sunday, 4 Jul 2021 5:00 PM

Follow-up / National News Center الخبر

Today, Sunday, the Governor of the Saudi Central Bank, Fahd Al-Mubarak, confirmed that the recent decline in foreign exchange reserves is due to reasons, including the time gap between import payments and export income.

The central bank’s net foreign assets, a measure of the kingdom’s ability to peg its currency to the dollar, fell eight billion dollars from a month ago to 436 billion dollars in April, recording the lowest level in more than ten years, and then returned to decline in May, according to the latest central bank data, to about $433 billion.

Al-Mubarak told Reuters: “The decline in reserves over the past two months is mainly due to financing the recovery in demand for imports that were affected by the pandemic, while the progress or delay of oil income from taxes and distributions leads to some fluctuation in the level of central bank reserves.”

The decline seemed surprising in light of the recovery in oil prices, and some analysts say that it may be linked to transfers to the sovereign wealth fund, the Public Investment Fund, which last year received $ 40 billion in reserves to finance investments.

The governor said in a statement to “Reuters”: “The recovery of import activities, which recorded a low level in May 2020, preceded a recovery in the value of exports. These changes are expected in light of the exceptional economic repercussions over the past 18 months, with the return of economic conditions to approach more than normal.”

The central bank usually does not disclose the reasons for the change in the level of net foreign assets.

He pointed out that at the $433 billion level, reserves are much more than Riyadh needs to protect the currency peg, but the bouts of low oil prices in the past few years have hurt the Saudi riyal in futures markets with investors betting that the kingdom may eventually have to devalue its currency. .“National

محافظ المركزي السعودي يفسر سبب تراجع الاحتياطيات من النقد الأجنبي

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