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Fri 27 May 2016 02:45 AM

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Saudi Arabia says no plans to change exchange rate policy

Central bank governor riyal currency has been suffering due to market speculation that the policy might change

Saudi Arabia says no plans to change exchange rate policy

Saudi Arabia would not benefit from altering its exchange rate policy and does not intend to do so, its new central bank governor told the state-linked Al Arabiya channel in a televised phone call on Thursday.

Ahmed al-Kholifey said the riyal currency has been suffering due to market speculation that the policy might change.

"The agency does not intend to change the exchange rate policy. There are no benefits from changing the current exchange rate," he added.

The riyal's peg of 3.75 to the US dollar has been a cornerstone of Saudi policy since 1986. But the collapse of oil prices since 2014, which created a $100 billion state budget deficit, has fuelled speculation in financial markets over whether it can be sustained.

Kholifey, formerly the central bank's deputy governor for research and international affairs, was appointed head of the Saudi Arabian Monetary Agency (SAMA) in a broad reshuffle of top policymakers on May 7.

SAMA researchers published a paper last month, before Kholifey's promotion, stressing that keeping the peg was probably the best course for Saudi Arabia in the near future, but suggesting it may need to change if economic conditions shift.

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