Saudi Arabian Monetary Authority (SAMA), the Kingdom's central bank, is setting policy in line with the US Federal Reserve's interest rate policy and has enough tools to deal with any pressure on the riyal-dollar peg, said SAMA governor Ahmed al Khulaifi.
During a financial industry conference in Abu Dhabi, Khulaifi responded to a question whether the expected rise of the US interest this year would exert pressure on the currency pegging.
His statements were made during the 9th edition of Global Financial Markets Forum, which is organized by First Abu Dhabi Bank in cooperation with Central Bank of the United Arab Emirates and Abu Dhabi Council for Economic Development and is held under the patronage of Crown Prince of Abu Dhabi Mohammed bin Zayed Al-Nahyan.
“I want to stress that this currency regime has helped UAE for so many years and there is no change in terms of our view on that as a policy,” Mubarak al-Mansoori, governor of the UAE Central Bank, said on the sidelines of the Global Financial Markets Forum. A final decision on a new system of setting interest rates among UAE banks, which will be more efficient and more closely based on real data from the market, is expected to be taken this year, the UAE central bank governor added.
“It's ongoing and we're having final discussions with the banks,” Mansoori told Reuters on the sidelines of the conference in Abu Dhabi. On when the new system would be introduced, he added: “I'm hopeful anytime soon, but it depends on our talks with the banks.”
A decision still needs to be taken on whether the number of banks on the rate-setting panel will change, he said. Interest rates, used in many UAE financial transactions, are calculated daily by a panel of 10 banks for maturities ranging from overnight to one year. Under the present system, the two highest and two lowest rates quoted by banks are discarded and the rest are averaged.
The forum witnessed discussions about organizational matters as well.
