AGL 40.30 Increased By ▲ 0.10 (0.25%)
AIRLINK 130.29 Increased By ▲ 1.18 (0.91%)
BOP 6.29 Decreased By ▼ -0.31 (-4.7%)
CNERGY 4.03 No Change ▼ 0.00 (0%)
DCL 8.85 Increased By ▲ 0.40 (4.73%)
DFML 42.74 Increased By ▲ 1.49 (3.61%)
DGKC 87.50 Increased By ▲ 0.50 (0.57%)
FCCL 33.78 Increased By ▲ 0.43 (1.29%)
FFBL 65.96 Increased By ▲ 0.06 (0.09%)
FFL 10.67 Increased By ▲ 0.13 (1.23%)
HUBC 113.85 Increased By ▲ 3.15 (2.85%)
HUMNL 16.09 Increased By ▲ 0.86 (5.65%)
KEL 4.80 Increased By ▲ 0.02 (0.42%)
KOSM 7.98 Increased By ▲ 0.15 (1.92%)
MLCF 42.09 Increased By ▲ 0.19 (0.45%)
NBP 61.10 Increased By ▲ 0.60 (0.99%)
OGDC 184.90 Increased By ▲ 2.10 (1.15%)
PAEL 25.60 Increased By ▲ 0.24 (0.95%)
PIBTL 7.26 Increased By ▲ 1.00 (15.97%)
PPL 146.60 Decreased By ▼ -1.21 (-0.82%)
PRL 24.59 Increased By ▲ 0.03 (0.12%)
PTC 16.48 Increased By ▲ 0.24 (1.48%)
SEARL 70.51 Increased By ▲ 0.01 (0.01%)
TELE 7.36 Increased By ▲ 0.06 (0.82%)
TOMCL 36.16 Decreased By ▼ -0.14 (-0.39%)
TPLP 8.15 Increased By ▲ 0.30 (3.82%)
TREET 16.00 Increased By ▲ 0.70 (4.58%)
TRG 51.40 Decreased By ▼ -0.30 (-0.58%)
UNITY 27.46 Increased By ▲ 0.11 (0.4%)
WTL 1.28 Increased By ▲ 0.05 (4.07%)
BR100 9,896 Increased By 54.4 (0.55%)
BR30 30,314 Increased By 277.4 (0.92%)
KSE100 93,019 Increased By 499 (0.54%)
KSE30 28,879 Increased By 92.5 (0.32%)

Saudi Arabia's central bank governor said on Wednesday it had no plans to adjust bank reserve requirements as soaring inflation rather than the global financial crisis topped its concerns. Banks in the world's largest oil exporter are not facing a shortage of funding, Saudi Arabian Monetary Agency (SAMA) Governor Hamad Saud al-Sayyari told Reuters, though he said the bank could open new windows for any future liquidity needs.
"At the moment there is no liquidity crunch," Sayyari said in an interview at SAMA's headquarters in Riyadh. "We don't feel there is a shortage of liquidity in the market."
The bank has raised interest rates steadily and tightened reserve requirements four times since last November, to 13 percent from 7 percent, due to a flood of foreign investor cash which had raised liquidity and bolstered inflation.
But interbank rates in Saudi Arabia have more than doubled since early May as credit markets tightened and investors withdrew bets on Gulf states revaluing their dollar-pegged currencies to fight inflation.
Saudi bankers said this week the shift in liquidity meant the central bank should consider reducing the reserve ratio to free up more funds for banks. But the bank remains firm as it tries to balance credit growth with its efforts to tackle inflation at a near 30-year high of 10.9 percent.
"We have no plan to change it (bank reserve requirements)," he said. "We have two objectives: controlling inflation and maintaining the stability and the functioning of the financial system." The global liquidity crunch has hit banks across the oil-rich Gulf, making it hard to finance major infrastructure, real estate and industrial projects in the midst of an economic boom.
The United Arab Emirates this week launched a 50 billion dirham ($13.62 billion) emergency facility for banks to help them cope with a growing global liquidity crisis stemming from the turmoil in the US financial sector. Saudi Arabia's central bank could intervene if the situation worsened, but the need had yet to arise, Sayyari said.
"We have windows to open for any needs from the banks," he said, without elaborating. He also said that inflation in the kingdom was starting to show signs of stabilising. "It has already started to show some signs of stabilising ... We expect it to slow down in the second half or the first half of next year," he said.

Copyright Reuters, 2008

Comments

Comments are closed.