E-Paper
Sign In
Dollar Peg for Economic Reasons: Saudi
RIYADH - Saudi Arabia pegs its riyal to the US dollar purely for economic reasons, not because of emotions or politics, its central bank governor said on Monday, adding it sees difficulties in setting an inflation target.
- PUBLISHED: Tue 5 Jan 2010, 10:47 PM UPDATED: Mon 6 Apr 2015, 10:23 AM
The greenback, to which the kingdom has pegged its riyal since 1986, had been under pressure in recent months, reviving expectations it could help boost inflation in the biggest Arab economy, a major importer of food products.
“Businessmen understand better than anyone else the benefits of pegging the riyal to the dollar,” Muhammad Al Jasser, Governor of the Saudi Arabian Monetary Agency, told a business gathering in the capital of Riyadh.
Recommended For You
“Pegging the riyal to the dollar is not motivated by emotional or political considerations, but (it is) purely for economic interests,” he said.
Most of Saudi foreign trade, oil revenues and commodities trade is in dollars as well as 60 per cent of global reserves, he added. The governor said on Saturday that the country sees no need to change its dollar-based foreign exchange regime as the regime had served the national economy well in the last two decades. Jasser also said on Monday he saw setting an inflation target as “very difficult,” responding to businesses' call to establish one, only saying that SAMA's role was to make the economic cycle as smooth as possible. The world's biggest oil exporter saw annual inflation climbing to 4.0 per cent in November, from October's 28-month low on rising home rents and import costs.