Broad money supply in Saudi Arabia posted its sharpest rise in a year
in March while the central bank's foreign assets grew at their fastest
pace since the end of November.
Saudi Arabian Monetary Agency (Sama) data showed M3 money supply
surging 4 per cent in March to SR582.6 billion ($155.4 billion), its
sharpest rise in a year.
Money supply growth spiked last year but slowed considerably in January
before gathering steam again. M3 rose 1.9 per cent in February, after
inching up 0.64 per cent in January and 1.1 per cent in December.
Year-on-year M3 rose 15 per cent in March, against a 14.4 per cent rise
in February.
According to Sama's figures, the rise came mainly from time and savings
deposits which analysts said could be linked to a stock market crash that
has slashed the capitalisation of the largest Arab bourse by almost half
since late-February.
'There was a big rise in money supply in March but it was not due to
any increase in bank lending... Some of this rise may have stemmed from
the decline in the stock market as investors sold shares and the proceeds
were put in their accounts,' said Zahid Khan, chief economist of Riyadh
Bank.
Sama data put foreign assets at SR648.53 billion ($172.9 billion), up
7.7 percent from February when they rose 2.8 percent from January. The
March rise in foreign assets was their strongest since November 2005.
Sama's deposits with banks abroad reached SR117.1 billion, up 23.3 per
cent from February and 140 per cent from March 2005.
Foreign currencies convertible to gold reached SR83.6 billion in March,
down about 2 per cent from February. Sama's investment in foreign
securities rose 6.3 per cent to 459.1 billion riyals, continuing a trend
that started in July, 2005.
High prices for Saudi Arabia's crude exports have pumped cash into
state coffers for the last three years, allowing the government to boost
foreign assets and cut domestic debt. Foreign assets in March were 81 per
cent higher than the level in March 2005.
Growth in bank claims on the private sector -- an indicator of business
and investor confidence -- slowed considerably in March, increasing 0.28
per cent to SR447.46 billion, compared to a 1.4 per cent rise in
February.Reuters
