Saudi central bank reiterates faith in US dollar

US DOLLAR: Saudi Arabian Monetary Agency (SAMA) reiterates support for greenback. (Getty Images)

Saudi Arabian central bank Governor Mohammad al-Jasser reaffirmed his country’s commitment to its dollar peg and said he supports the US handling of the global economic crisis.

''We still have confidence in what the US is doing,'' al- Jasser said Wednesday at the 9th Gulf Cooperation Council banking conference in Manama, Bahrain.

''Certainly it’s throwing all the available weapons at the problem in order to stabilise the financial system,'' he added.

The comments, reported by news agency Bloomberg, came as some political circles have begun to question the US dollar’s global hegemony, given the state of America’s finances.

China’s Premier Wen Jiabao said on March 13 that he was worried about China's heavy exposure to the United States. Bankers have long assumed that roughly two-thirds of China's nearly $2 trillion in reserves is parked in dollar assets, primarily US government and other bonds.

On Wednesday, however, Hu Xiaolian, a vice governor of the People's Bank of China, said investing in US Treasuries remained an important part of China’s foreign exchange reserve management and would continue.

Mr Hu, who is also head of the State Administration of Foreign Exchange, said China would pay close attention to changes in the value of its Treasury holdings.

That said, a senior Russian government source said last week that China and other emerging nations backed Russia's call for a discussion on how to replace the dollar as the world's primary reserve currency.

Hu said research into a multi-polar global currency system could begin but the dollar remained the key currency for trade, settlement, payments and pricing. The dollar also dominated financial investment.

"We may start studies and discussions about a multi-currency regime, but realistically we should focus more on enhancing supervision of the dollar-led currency system.

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