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A recent drop to record lows in Saudi Arabia’s foreign reserves, a measure of its ability to support its dollar-pegged currency, was partly due to a lag between import payments and export receipts, the Saudi central bank governor told Reuters.
Net foreign assets at the central bank, known as SAMA, dropped monthly by roughly $8 billion to $436 billion in April, their lowest in more than a decade, and dropped further in May, recent central bank data showed, declining to about $433 billion.
“Reductions in reserves over the past couple of months were mainly to finance a rebound in pandemic-hit import demand, while leads-and-lags in oil income (tax and dividends) cause some degree of fluctuation in SAMA’s reserves level,” said Fahad al-Mubarak, the governor of the central bank.
The declines appeared counterintuitive given the recent rebound in oil prices, and some analysts said they could be linked to transfers to the Saudi sovereign wealth fund, Public Investment Fund, which last year got $40 billion in reserves to fund investments.