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SAMA says dollar peg is beneficial.

Saudi Arabia's currency peg to the US dollar "benefits" the Kingdom and will remain as long as the greenback remains the main reserve currency globally, the Governor of the Saudi Arabian Monetary Agency (SAMA) was quoted as saying in the press. "The US dollar is still the main reserve currency globally. Pegging the Saudi riyal to it benefits the Kingdom until a major rival (currency) appears," Al-Jasser told the press.

The greenback has dropped to a 15- month low against a basket of six major currencies this week, prompting a rare recent comment on its value by US Federal Reserve Chairman Ben Bernanke The peg issue is gaining momentum again as the dollar retreats and oil prices recover, helping economies in the world's top oil exporting region emerge from a downturn.

Kuwait -- which dropped its dollar peg in 2007 in favor of a currency basket which includes the greenback -- said that Gulf countries will discuss pegging their planned single currency to a basket instead of the US dollar.

The news report also quoted Governor Al Jasser as saying that "Saudi Arabia's fiscal reserves remain high." "We have not encountered any financial problems and are still in a very comfortable position and do not need to issue any debt instruments at present," Al-Jasser said.

The Saudi Arabian Monetary Agency (SAMA) has kept interest rates unchanged in the third quarter, viewing a further rate cut as unlikely to spur lending while a rate hike was unnecessary given tepid inflation. "Saudi Arabia's monetary policy fits the current circumstances, and reducing the basic lending rates was an attempt to curb the impact of the financial crisis," Al-Jasser was quoted as saying in the news report, recently, adding that the authority will take "adequate measures to ensure stability."

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Title Annotation:Saudi Arabian Monetary Agency
Publication:Saudi Economic Survey
Article Type:Brief article
Geographic Code:1USA
Date:Dec 7, 2009
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