Saudi monetary policy appropriate, says cbank
Singapore, May 7, 2009
Saudi Arabia's central bank governor said on Thursday that its monetary policy was at the appropriate level given the country's economic conditions.
The central bank, like others around the world, has slashed benchmark lending rates in a policy attack on the effects of the global financial crisis.
'We think it is the appropriate level for the state of the economy at this point in time,' Muhammed al-Jasser told reporters at a conference in Singapore.
'If things change, one way or the other, that's what the central bank is there to do, to continue viewing all aspects of the economy and take whatever is necessary to ensure stability.'
Saudi Arabia, the world's top oil supplier, has seen revenues hit after cutting its oil output in an effort by Opec producers to prop up crude prices after a global slowdown sent prices crashing from record highs last year.
'We see oil prices recovering from the bottom that we have seen, because market players feel that maybe, maybe, the worst is behind us in terms of the global economic contraction. If that proves to be the case, than that is positive not only for oil... but also petrochemicals,' Jasser said.
'If global demand, i.e. the global economic recovery continues, I expect oil prices to continue their recovery.'
He said the country's financial reserves are still very high.
'We did not get into any financial problems. We are still very comfortable and we will not need to issue any debt instruments at this time.'
Gulf leaders on Tuesday chose the Saudi capital Riyadh as the base for a joint monetary council that will evolve into the Gulf central bank, though hurdles lie ahead for the Gulf Cooperation Council (GCC). Jasser declined to comment on timing.
'Now they will go the parliament of the GCC. Once these laws have been ratified, the monetary council will start operating and all of the rest of the issues will have to be resolved and taken care of by the monetary council.'
He said the US dollar is still the dominant global reserve currency and it was serving Saudi Arabia well as a currency peg. 'Until a major competitor come to the fore and provides an alternative, I do not expect the dollar to lose its role in the global financial system,' he said. 'As long as it is serving us well, if it ain't broken why fix it?' - Reuters