Markets

Saudi forex assets fall but US Treasury holdings rise

August 16, 2024, 1:57 PM

Saudi holdings of US treasuries rose by $4 billion to take advantage of US interest rates — Saudi holdings of US Treasuries rose by $4 billion to take advantage of US interest rates

Forex holdings down $15bn
Treasuries up $4bn
Scope to fund giga-projects

Saudi Arabia’s net foreign assets fell by $15.2 billion month on month in July, but the kingdom’s US Treasuries holdings shot up by another $4 billion in June, new data showed this week.

The Saudi central bank’s net foreign assets decreased from SAR1.67 trillion ($445.3 bn) in June to SAR1.613 trillion in July, preliminary data showed.

The latest US Treasury filing showed Saudi holdings, which are managed by the central bank, rose from $136.3 billion to $140.3 billion in June, as governments took advantage of high US interest rates before an expected fall later this year.

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Net foreign assets remained higher than the SAR1.59 trillion level they stood at in April. The government raised money from debt markets this year and received most of the $31 billion dividend Aramco paid out for the first quarter, as the 82 percent owner of the state oil company.

This has given the government more scope to funnel cash to its Public Investment Fund for the giga-projects at the heart of its economic diversification plans.

PIF is in need of cash for the $1.25 trillion reform projects because of lower than expected oil prices and foreign direct investment.

In its July Saudi Arabia report, the International Monetary Fund said Saudi forex reserves were ample and that foreign assets held by the PIF and other government-related entities offer strong additional buffers.