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SAUDI Arabia’s money supply climbed to 2.97 trillion riyals ($791 billion) in January, marking a 9 per cent annual rise, official data showed, reports Arab News.
According to figures from the Saudi Central Bank, known as SAMA, demand deposits accounted for 48.75pc of the total, reaching 1.45trn riyals. While still below the April 2021 peak of 60.21pc, they edged up from 48.42pc a year ago, reflecting shifting monetary conditions. Demand deposits are a crucial part of the money supply. When individuals deposit money into checking accounts, it increases the total amount of demand deposits, thereby expanding the overall money supply in the economy.
A demand deposit refers to money held in a bank account that can be withdrawn at any time, whenever the account holder requires it.
These funds are generally used for everyday expenses. Banks or financial institutions typically offer little to no interest on the balance in a demand deposit account.
Time and savings deposits – which surged during the US Federal Reserve’s aggressive rate hikes, mirrored by Saudi Arabia due to the riyal’s peg to the US dollar – reached 985.03bn riyals in January, accounting for 33.21pc of total deposits.
As the Fed began easing monetary policy in September, lowering interest rates from their 6pc peak to 5 pc by December, time deposits started to decline from their 33.61pc high in November.
This shift reflects a gradual return to shorter-term deposit preferences as rate-sensitive accounts adjust to a lower-yield environment. The third-largest category, other quasi-money deposits – including residents’ foreign currency accounts, marginal deposits for letters of credit, outstanding remittances, and bank repo transactions with the private sector – stood at 301.28bn riyals, making up 10.16pc of total deposits. Currency outside banks totalled 233.71bn riyals.
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