When compared to the same month last year, the foreign assets held by Saudi Arabia’s commercial banks increased by 22% in February, totalling SR347.63 billion ($92.7 billion). According to new data from the Kingdom’s central bank, also known as SAMA, the institution’s assets and investments abroad have significantly increased.
Alternatively, during the same period, foreign liabilities held by Saudi banks increased by 38 percent, reaching to SR288.22 billion. The international holdings have experienced growth, which include different debts to banks outside the Kingdom.
Furthermore, SAMA disclosed that in February, its net foreign assets totalled to SR1.55 trillion. This graph shows the banking industry’s overall strength and standing internationally. Central and commercial banks’ foreign assets differ in their utilization within the financial system. Whereas commercial banks use their foreign assets for investments, customer service, and business operations; the central banks utilize them mainly for reserve management and monetary policy. Reserve holdings as a whole came to SR1.62 trillion; compared to the same month last year, were down by 5 percent.
A nation’s reserve position with the IMF represents its holdings of foreign currency, which can be utilized to acquire foreign currency as required. Furthermore, banks are able to fulfil their obligations denominated in different currencies. Banks also purchase overseas assets, including corporate and government bonds issued by multinational corporations. These investments enhance the institutes’ portfolios by diversifying them in addition to serving as a source of income.
Saudi Arabia has been enhancing its investment strategy by managing finance into state funds like the State Development Fund and the Public Investment Fund. Sixty percent of the reserve position in February was made up of investments in foreign securities. Thus, a decline in reserves might suggest that SAMA’s assets are being varied across distinct financial resources.
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