JEDDAH – Strong oil prices allied with higher exports to boost Saudi Arabia's net foreign assets by nearly SR72 billion to their highest level at the end of April and the bulk of the funds are controlled by the Saudi Arabian Monetary Agency (SAMA), the Riyadh-based Jadwa Investments said in a study. From around SR2.57 trillion at the end of 2012, the net foreign assets of the Kingdom's financial system rose to a record high of SR2.64 trillion at the end of April, the study said. Its figures showed the country's foreign liabilities marginally increased from around SR4.1 billion at the end of last year to SR4.7 billion in April. “The improvement in gross foreign assets reflects in part a rebound in oil exports during February and March, which were scaled slightly up to 7.2 million barrel per day (mbpd) compared with 7.1mbpd in December and January,” the report said. It showed the foreign asset position also contributed to an expansion in SAMA's total assets, which grew three percent year-to-April to SR2.56 trillion. Within foreign assets, SAMA increased its investment in foreign currencies by SR137.5 billion year-to-April while reducing deposits with banks abroad (SR59.4 billion) as well as investment in currencies convertible to gold (SR717 million). “We expect the positive momentum in SAMA's foreign assets to slightly slow over the coming few months relative to their strong growth last year as oil prices shift to below $105 per barrel,” Jadwa said. The report showed the net foreign assets of the Kingdom's commercial banks contracted by SR6.4 billion, or 4.8 percent year-to-April. Although gross foreign assets slipped by 5.5 percent to SR201 billion, foreign liabilities also contracted but at a slower base of 5.4 percent to SR74 billion. At the same time, banks' total deposits with SAMA maintained a positive trend for the second consecutive month in April, increasing by SR6.2 billion to SR167 billion, of which 53.6 percent or SR89.6 billion was excess reserves. While this is considerably less than the excess deposits earlier this year (SR111 billion in January), it remains eight percent higher than in April 2012, Jadwa said. “This reflects the ample liquidity in the banking system which could translate into higher credit growth in the coming months. With such liquidity conditions and strong growth in all measures of the money supply, the risk is on the upside for domestic inflation.” – SG
