Riyal-dollar peg to stay: SAMA

Riyal-dollar peg to stay: SAMA
Updated 12 January 2016

Riyal-dollar peg to stay: SAMA

Riyal-dollar peg to stay: SAMA

JEDDAH: Saudi Arabian Monetary Agency (SAMA) Gove Fahd Al-Mubarak reiterated the agency’s official position that it will uphold its mandate of maintaining the peg at SR3.7500 per US dollar.

SAMA’s position is backed up by a full range of monetary policy instruments including its foreign exchange reserves, he said.
Al-Mubarak said in a statement: “We have observed recently volatility in the dollar/riyal forward market due to the mispricing linked to market operators’ misperception about Saudi Arabia’s overall economic backdrop.”
He added: “Factors affecting the forward market are largely speculative in nature. Saudi Arabia’s key economic and financial indicators are stable, as reflected by its net creditor position with a sound and resilient banking system.”
Despite the global environment of lower oil prices, the Kingdom has maintained a high level of spending in the 2016 fiscal budget.
Education and health care remain the focus of government spending, accounting for 35 percent of total spending, Jadwa Research stated in a recent report.
While spending on military and security services constitutes the largest single share at 25 percent.
A new allocation accounting for 22 percent has been introduced to support the budget and help address shortages in revenue We estimate that budgeted investment spending has been reduced to SR204 billion in 2016, with spending on key social infrastructure projects maintained.
This points to a gradual consolidation in the fiscal stance but also shows the government’s sustained commitment on maintaining a high level of spending on human capital and social infrastructure, Jadwa economists said.