RIYADH: According to SAMA, the Kingdom’s central bank, the money supply in Saudi banks grew 9.21% year over year in October to SR2.94 trillion ($782.96 billion). Term deposits, which increased by 15.34 percent to SR971.1 billion over this time, were a major contributor to this rise. The biggest part of the money supply, demand deposits, made up 48.55 percent, or SR1.42 trillion, but they grew at a rather slow rate of 8.63 percent.
SR312.51 billion, or 10.64 percent of the money supply, was the amount of other quasi-money deposits, which fell 4.27 percent. In October, time and savings deposits made up 33.07 percent of Saudi Arabia’s total money supply, the largest amount in almost 15 years. Due in significant part to SAMA’s convergence of its interest rate policy with that of the US Federal Reserve, this increasing tendency has accelerated in recent years.
In order to optimize returns during this time of high interest rates, depositors were encouraged to switch to interest-earning accounts by the Fed’s tightening cycle, which drove rates to a peak of 6% in July 2022. Interest-generating accounts became more alluring to Saudi depositors looking for larger returns as a result of this mirrored policy, which was implemented to fight inflation.
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