SAMA ends repo agreements to maintain monetary stability
06/03/2018
Argaam
The Saudi Arabian Monetary Authority (SAMA), the Kingdom’s central bank, will no longer offer repurchase agreements for 7-, 28- and 90-day periods to “enhance” monetary stability, it said in a statement.
The announcement comes after the decline of short-term Saudi money market rates below US rates for the first time in nine years.
The repos were a way for the central bank to lend short-term money to banks. When the repos were introduced in late 2016, the Saudi banking system faced a liquidity squeeze due to low oil prices.
The central bank will continue to use one-day repos, which it has done in the past to cope with sudden shortages of liquidity at individual banks.
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