SAMA Committed to Pegging SAR to US Dollar as Strategic Choice

SAMA affirmed commitment to its exchange rate policy of pegging the Saudi riyal to the US dollar; as a strategic choice that supported economic growth in the Kingdom for over three decades.

“SAMA remains committed to maintaining the exchange rate at the official rate of 3.75 riyals to the dollar; as an anchor of monetary as well as financial stability,” it said in a statement on Monday.

SAMA’s foreign exchange reserves remain sufficient to meet all demands of the national economy for foreign exchange. This is with foreign exchange reserves covering 43 months of imports and 88 percent of broad money (M3), it added.

SAMA also affirmed that the current exchange rate arrangement is a primary driver for monetary stability and sustainable economic growth.

The Authority has been recently active by issuing dozens of decisions related to enhancing liquidity, support, and financing. This is also to face the effects of the coronavirus outbreak on the national economy.

Stimulus package

On March 14, the Kingdom announced a stimulus package, including $13.3bn for SMEs, with the aim of empowering the financial sector and mitigating its expected financial and economic impacts on the private sector.

In cooperation with Kafalah Program (SME Financing Guarantee Program), SAMA launched in late April a program that would guarantee 95 percent of the value of the granted financing according to the approved mechanisms.

It aims at providing additional support and enhancing the creditworthiness of MSMEs. Besides, overcoming the challenges of financing these enterprises.

This would reduce the impact of the decrease in cash flows. It also facilitates serving customers and paying employees’ salaries and dues.

Last week, SAMA directed banks to postpone repayment of loan installment for three months for Saudi workers supported by the unemployment insurance program (SANED).

The central bank said on its Twitter account that the decision will be effective as of April 2020. It also noted that deferring installments shall take place without any additional charges.

It also added that clients do not need to submit any request to the bank.