Saudi money supply surges 26%

SUPPLY SURGE: The amount of money circulating in the economy grew 26.2% in February. (Getty Images)

Annual money supply growth in Saudi Arabia accelerated to 26.2% in February even as the kingdom tightened lending curbs to control spiralling inflation, central bank data showed on Saturday.

M3, the broadest measure of money circulating in the Saudi economy, grew to 827.35 billion riyals ($220.6 billion) at the end of February compared with 655.83 billion riyals a year earlier, Saudi Arabian Monetary Agency (SAMA) data showed.

Money supply growth was 23.9% in January.

Central bank net foreign assets rose 47.1% in February to 1.24 billion riyals, the data showed.

Annual inflation in Saudi Arabia reached 8.7% in February, its highest level in 27 years.

The kingdom has raised bank reserve requirements three times since November, forcing banks to keep more money in their vaults as the US Federal Reserve repeatedly slashed interest rates since September.

The Saudi central bank gradually raised the reserve ratio from 7% in November to 12% in April.

Saudi Arabia, which has been linking its riyal to the dollar for 22 years, lowered its reverse repurchase rate, which guides bank deposit rates, by two percentage points after the Fed cuts. It has kept its repurchase rate, which guides lending rates, steady at 5.5%. (Reuters)

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