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Saudi injects $5.3bn into local banks

September 26, 2016 at 4:48 pm

Saudi Arabia’s central bank announced that it injected 20 billion riyals ($5.3 billion) of time deposits into local banks “on behalf of government entities” to support monetary stability.

In a statement, Saudi Arabian Monetary Agency, as the central bank is known, stated that it carried out this measure as part of its monetary policy to support local economic stability.

The statement also noted that the central bank had introduced seven-day and 28-day repurchase agreements, in addition to the one-day tool which is currently in use.

The move comes in an effort to support the Saudi economy which has been badly hit by the fall in oil prices, something the kingdom is reliant on.

According to Bloomberg, the decline in oil prices has forced the Saudi government to withdraw money from the local banks, resulting in liquidity shortages.

To solve the liquidity crisis, the central bank offered lenders 15 billion riyals ($4 billion) in short-term loans in June.