Saudi Central Bank To Drain Liquidity

Bank will allow some deposits made in 2016 to mature without rolling over

- Onur Ant

Saudi Arabia’s central bank plans to drain excess liquidity from the banking system to mitigate pressure on the riyal’s peg to the dollar as U.S. interest rates rise, Governor Ahmed Abdulkarim Alkholifey said.

The Saudi Arabian Monetary Authority, as the central bank is known, will allow some deposits placed with commercial banks in 2016 to mature without rolling them over, he said, boosting a key interbank rate for riyals that has lagged Libor, its London equivalent for dollars, and raised the prospect of capital flight.