Saudi Arabia's market interest rates are climbing as the economy booms, but the rise is as much due to international pressures as strain on banks' lending resources, and any hike of official rates probably remains distant.
The increase in interbank lending costs underlines how Saudi money markets are returning to normal since a sudden increase in government spending last year, announced in response to the Arab Spring uprisings in the region, flooded the banking system with money and pushed rates down to record lows.
The three-month Saudi Arabian Interbank Offered Rate has risen to 0.88 percent, its highest level since May 2009, from last September's low of 0.60 percent. Longer-term interbank rates up to one year have increased by slightly smaller margins, while Treasury bill yields are up in sympathy.
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