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Thu 23 Jul 2009 03:29 PM

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Saudi M3 money supply grows 16.4% in June

Saudi Arabian Monetary Agency (SAMA) website shows a money supply of 1 trillion riyals ($266.7bn) in June.

Saudi Arabia's central bank said on Thursday that annual M3 money supply grew 16.4 percent in June, compared to 16.9 percent in May.

The Saudi Arabian Monetary Agency (SAMA) website showed a money supply of 1 trillion riyals ($266.7bn) in June, compared to 986.8 billion riyals in May.

M3 is the broadest measure of money circulating in the Saudi economy. SAMA began posting weekly money supply data in April. The figures showed an increase in bank lending to the private sector to 728.7 billion riyals from 724.9 billion in May.

"It's the first significant growth in lending to the private sector since November 2008 and may well be an early sign that the credit cycle has found a floor and SAMA policy action is gaining traction," said analyst Simon Williams at HSBC in Dubai.

"Make no mistake, though, this is still a very subdued credit market. Over the first half of 2008, lending to the private sector rose 20 percent. In the first half of 2009, it actually shrank."

Benefiting from record oil prices before last year's collapse, Saudi Arabia has not experienced liquidity shortages but banks have become more selective in lending on the back of the global financial crisis. (Reuters)

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