Saudi Arabia Holds FX Policy Unchanged After Meeting-Bankers

Saudi Arabia, the Persian Gulf's largest economy, will keep its foreign exchange policy unchanged for now after a olicymakers met to discuss the controversial issue, bankers said Sunday.

 

Saudi Arabia's Finance Minister and Central Bank governor met Sunday with members of the country's Shura finance committee to discuss the Riyal's peg to the U.S. dollar, raising speculation of an imminent revaluation. "They said they will not change their foreign exchange policy for now," said one banker who declined to be named.

 

"For Saudi Arabia to revalue of de-peg there needs to be something extreme like other GCC countries moving away from the dollar," the banker said.Saudi Arabia's Riyal is fixed at a rate of around 3.72 to the U.S.dollar.

 

Riyadh-based daily al Eqtisadiah reported Saturday that Saudi Arabian officials were to discuss raising the exchange value of the Saudi riyal to the U.S. dollar during the meeting.The meeting between the Shura finance committee, comprised of members appointed by King Abdullah, Ibrahim Al Assaf, Saudi finance minister, and Saud Al Sayyari, head of the Saudi Arabian Monetary Agency, addressed the impact of further U.S. interest rate cuts on the Saudi economy.

 

Gulf central bankers are struggling to follow U.S. Fed moves to head off an economic recession as the region's oil-rich economies continue to boom. The Fed has lowered the federal funds rate 225 basis points since September, including 125 basis points last month alone. Interest rate cuts and the weak U.S. dollar are helping fuel record inflation in the region and undermine record oil earnings.