Saudi Arabia's money supply rises 8.4% to $829bn

16/09/2025 03:54 AST

Saudi Arabia's broad money supply climbed 8.4 percent in July from a year earlier, adding SR239.97 billion ($63.9 billion) to reach SR3.11 trillion, driven by higher deposits, official data showed.

The liquidity gauge, known as M3, also advanced 2.1 percent quarter on quarter, rising to SR3.12 trillion by the end of June from SR3.06 trillion in March, the Saudi Press Agency reported, citing central bank figures.

The pickup in money supply comes as the Saudi Central Bank, known as SAMA, balances liquidity management with efforts to support economic activity under Vision 2030.

Shifts in deposit structures also reflect the influence of interest rates and financial incentives on savings behavior.

Demand deposits made up the largest share at 46.5 percent, or SR1.45 trillion, followed by time and savings deposits at SR1.12 trillion, accounting for 36.1 percent. Quasi-monetary deposits stood at SR296.72 billion, while currency in circulation outside banks reached SR242.34 billion.

"Quasi-monetary deposits include residents' deposits in foreign currencies, deposits against letters of credit, outstanding remittances, and repurchase agreements (repos) executed with the private sector," the SPA report stated.

The money supply is categorized into three measures: M1, which includes currency in circulation outside banks in addition to demand deposits; M2, which consists of M1 plus time and savings deposits; and M3, the broadest definition, which adds other quasi-monetary deposits.

The data highlights a steady shift toward interest-bearing savings, with time and savings deposits expanding faster than demand deposits in recent months. In June, M3 touched a record SR3.12 trillion, up 7.63 percent year on year, marking the highest share of savings deposits in more than a decade.

Another recent trend is the accelerated growth in time and savings deposits, which has been outpacing demand deposits.

After peaking at 6 percent, SAMA reduced its repo rate in stages - first to 5.5 percent in September 2024, then to 5 percent in December - in line with US monetary policy.

Despite the cuts, rates remain high compared with previous years, making fixed-term, interest-bearing accounts more attractive than demand balances.

The US Federal Reserve's next meeting is set for Sept. 16-17.