Saudi Arabia’s central bank committed to riyal-US dollar peg

SAMA said it remained committed to maintaining the exchange rate of SR3.75 to the dollar. (AFP/File)
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Updated 04 May 2020

Saudi Arabia’s central bank committed to riyal-US dollar peg

  • Saudi Arabian Monetary Authority says current exchange rate policy is a major supporter of sustainable economic growth

RIYADH: The Saudi Arabia’s central bank on Monday affirmed its commitment to the exchange rate policy of pegging the Saudi riyal to the US dollar.

The Saudi Arabian Monetary Authority (SAMA) said the currency peg was a strategic option that contributed to the growth of the Kingdom’s economy for more than 30 years.

“SAMA remains committed to maintaining the exchange rate at the official rate of SR3.75 to the dollar as an anchor of monetary and financial stability,” the authority said.

SAMA said its foreign exchange reserves remain sufficient to meet all demands of the national economy, with enough to cover 43 months of imports and 88 percent of broad money. 

The authority added that the current exchange rate policy is a major supporter of sustainable economic growth.


Oil surges on hopes of new deal on output cuts

Updated 02 June 2020

Oil surges on hopes of new deal on output cuts

  • Brent price has doubled in five weeks
  • OPEC talks may be brought forward

DUBAI: Oil prices surged toward $40 a barrel on Monday as hopes rose for an early agreement to extend the big production cuts agreed by Saudi Arabia and Russia under the OPEC+ alliance.

Brent, the global benchmark, jumped by more 9 percent to nearly $39, continuing the surge that has doubled the price in five weeks — the best performance in its history. It recovered after record supply cuts agreed between the 23 countries of the OPEC+ partnership, and enforced cuts in US shale oil.

DME Oman crude, the regional benchmark in which a lot of Saudi Aramco exports are priced, rose above $40 a barrel for the first time since early March.

Market sentiment was buoyed by the possibility that the Organization of Petroleum Exporting Countries would agree with non-OPEC members to extend the cuts for a longer period than was agreed in April.

Oil analysts expect OPEC to fast track a “virtual” meeting to formally agree to maintaining cuts at the record 9.7 million barrels a day level. The meeting was scheduled for June 9, but bringing it forward would allow producers more time to set pricing levels.

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An official with one OPEC delegation told Arab News there was consensus among the 23 OPEC+ members for the new date, which could be as early as June 4. The meeting will also consider how long the current level of cuts would be maintained. Some OPEC members want it to run to the end of the year, other producers would prefer a two-month extension.

Omar Najia, global head of derivatives with trader BB Energy, told a forum run by Gulf Intelligence consultancy: “I’d be amazed if OPEC did not extend the higher level of cuts. As long as Saudi Arabia and Russia continue saying nice things to each other I’d expect the rally to continue.”

A Moscow source close to the oil industry said energy officials there had come to the conclusion that “the deal is working” and it was important to keep prices at an “acceptable” level.

Sentiment was also affected by a comparatively high level of compliance with the new cuts, running at about 75 percent among OPEC+ members, with only Iraq and Nigeria noticeable under-compliers.

Robin Mills, chief executive of Qamar Energy, said: “That’s where I’d expect it to be after two months in such a fluid situation. It will be even better in June.”