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Tuesday, 23 February 2010
Saudis to Keep Rates Low Until Lending Revives, Jadwa Says
Saudi Arabia will keep its reverse repurchase rate at a record low until there is an increase in bank lending in the Arab world’s biggest economy, Jadwa Investment Co. said.
“The reverse repo rate is at an all-time low of 0.25 percent in order to encourage banks to lend,” Riyadh-based Jadwa said. The Saudi central bank “is expected to maintain this rate at its present level until there is a sustainable pick-up in bank lending to the private sector.”
Saudi banks have tightened lending and increased provisions against bad loans in the world’s largest oil exporter, as the economy slowed and Saudi Saad Group and Ahmad Hamad Algosaibi Group defaulted. Bank lending to non-government companies fell by 14.5 billion riyals ($3.9 billion) in December, the largest decline since November 2004, Jadwa said in the report.
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