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Decline in Saudi Central Bank’s Foreign Assets in October 2023

Decline in Saudi Central Bank's Foreign Assets in October 2023
Saudi Central Bank

In October 2023, the Saudi Central Bank‘s foreign assets saw a notable decline. Preliminary, data indicated a $13.77 billion decrease from the previous month.

It resulted in net foreign assets of approximately 1.524 trillion riyals ($406.35 billion).

This 3.3% monthly drop was a reduction from September’s 1.579 trillion riyals.

Yearly Comparison

Year-over-year, the bank’s net foreign assets declined by 2%.

Saudi commercial banks also experienced a reduction in their net foreign assets, falling from SR59.8 billion to SR47.9 billion in October, nearly half the value from the same month the previous year.

Economic Context

The World Bank expects Saudi Arabia’s economy to shrink by 0.9% in 2023, mainly due to production cuts and lower oil prices.

Growth in the Middle East and North Africa is also predicted to slow to 1.9%, down from 6% last year.

Saudi Arabia’s oil production cuts to stabilize the market, with oil prices below $100 a barrel from the previous year.

Central Bank’s Revised Mandate

The Saudi Central Bank has changed its mandate for the first time in over 60 years, now focusing on supporting economic growth.

This reflects changes in the financial sector and new risks.

The bank, reporting directly to the King, has gained more independence.

During the pandemic, it played a key role, injecting SAR100bn ($22.4bn) into banks and helping small businesses with loan costs.

Monetary Stability, Currency Peg

The Saudi Central Bank remains committed to monetary stability and keeping the Saudi riyal pegged to the US dollar.

This policy has been in place for about 35 years despite low oil prices.

The bank is also responsible for the financial sector and managing the Kingdom’s foreign currency reserves, which have fallen significantly from over $700bn five years ago.

In summary, the October 2023 decline in the Saudi Central Bank’s foreign assets reflects wider economic challenges in Saudi Arabia such as reduced oil production and lower global oil prices.”

The bank’s recent actions and mandate update show its dedication to sustaining economic stability and growth in the Kingdom.

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