Saudi Arabia’s official reserve assets reached SR1.7 trillion ($452.8 billion) in July, reflecting a 6.06 percent increase compared to the same period last year, according to recent data from the Saudi Central Bank (SAMA). 

The data indicates that international currency holdings, which encompass currency and deposits abroad as well as investments in foreign securities, comprised 94.53 percent of the total reserves, amounting to SR1.61 trillion. This segment saw a 6.54 percent increase over the year. 

Official reserve assets also encompass monetary gold, special drawing rights (SDRs), the International Monetary Fund’s (IMF) reserve position, and foreign reserves. The SDRs, which represent 4.6 percent of the total reserves at SR78.03 billion, experienced a slight decrease of 0.44 percent. SDRs, created by the IMF, are based on a basket of major currencies including the US dollar, euro, Chinese yuan, Japanese yen, and British pound. They are used to supplement member countries’ official reserves and can be exchanged among governments for freely usable currencies. 

The IMF reserve position stood at SR13.21 billion, showing an 8.44 percent decrease during this period. This reserve represents the amount Saudi Arabia can draw from the IMF without conditionality. 

Saudi Arabia’s reserve coverage ratio remains one of the highest among Fitch-rated sovereigns, estimated at 16.5 months of current external payments, according to a February report. This robust ratio underscores the nation’s ability to fulfill external financial obligations over an extended period, highlighting its economic stability and effective foreign exchange reserve management. 

Since its establishment in 1952, SAMA has progressively scaled its management of foreign exchange reserves, with significant advancements in the 1970s. The Bank for International Settlements notes that SAMA has developed internal models to validate reserve adequacy and assess requirements, incorporating global best practices and specific macroeconomic factors pertinent to Saudi Arabia. These models are regularly back-tested to ensure their reliability. 

SAMA’s investment strategy focuses on preserving capital, maintaining liquidity, and achieving returns that align with its risk tolerance. 

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