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SAMA Committed to Pegging SAR to US Dollar as Strategic Choice

SAMA Committed to Pegging SAR to US Dollar as Strategic Choice
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SAMA Committed to Pegging SAR to US Dollar as Strategic Choice

SAMA Committed to Pegging SAR to US Dollar as Strategic Choice

The Saudi Arabian Monetary Authority (SAMA) has affirmed commitment to its exchange rate policy of pegging the Saudi riyal to the US dollar as a strategic choice that has supported economic growth in the Kingdom for over three decades.

“SAMA remains committed to maintaining the exchange rate at the official rate of 3.75 riyals to the dollar as an anchor of monetary and financial stability,” it said in a statement on Monday.

SAMA's foreign exchange reserves remain sufficient to meet all demands of the national economy for foreign exchange, with foreign exchange reserves covering 43 months of imports and 88 percent of broad money (M3), it added.

SAMA also affirmed that the current exchange rate arrangement is a primary driver for monetary stability and sustainable economic growth.

The Authority has been recently active by issuing dozens of decisions related to enhancing liquidity, support, and financing to face the effects of the coronavirus outbreak on the national economy.

On March 14, the Kingdom announced a stimulus package, including SAR50 billion ($13.3 billion) for SMEs, with the aim of empowering the financial sector and mitigating its expected financial and economic impacts on the private sector.

In cooperation with Kafalah Program (SME Financing Guarantee Program), SAMA launched in late April a program that would guarantee 95 percent of the value of the granted financing according to the approved mechanisms.

It aims at providing additional support and enhancing the creditworthiness of Micro, Small, and Medium Enterprises (MSMEs), as well as overcoming the challenges of financing these enterprises.

This would reduce the impact of the decrease in cash flows and facilitates serving customers and paying employees’ salaries and dues.

Last week, SAMA directed banks to postpone repayment of loan installment for three months for Saudi workers supported by the unemployment insurance program (SANED).

The central bank said on its Twitter account that the decision will be effective as of April 2020, noting that deferring installments shall take place without any additional charges.

It added that clients do not need to submit any request to the bank.

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Trump Vows New Tariffs on Mexico, Canada and China

FILE PHOTO: US President-elect Donald Trump attends a viewing of the launch of the sixth test flight of the SpaceX Starship rocket, in Brownsville, Texas, US, November 19, 2024. Brandon Bell/Pool via REUTERS/File Photo
FILE PHOTO: US President-elect Donald Trump attends a viewing of the launch of the sixth test flight of the SpaceX Starship rocket, in Brownsville, Texas, US, November 19, 2024. Brandon Bell/Pool via REUTERS/File Photo
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Trump Vows New Tariffs on Mexico, Canada and China

FILE PHOTO: US President-elect Donald Trump attends a viewing of the launch of the sixth test flight of the SpaceX Starship rocket, in Brownsville, Texas, US, November 19, 2024. Brandon Bell/Pool via REUTERS/File Photo
FILE PHOTO: US President-elect Donald Trump attends a viewing of the launch of the sixth test flight of the SpaceX Starship rocket, in Brownsville, Texas, US, November 19, 2024. Brandon Bell/Pool via REUTERS/File Photo

US President-elect Donald Trump vowed on Monday to impose sweeping new tariffs on Mexico, Canada and China as soon as he takes office as part of his effort to crack down on illegal immigration and drugs.

He said he would impose a 25% tax on all products entering the country from Canada and Mexico, and an additional 10% tariff on goods from China, as one of his first executive orders.

In a series of posts to his Truth Social account, Trump vowed to hit some of the United States' largest trading partners with duties on all goods entering the country.

“On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% tariff on ALL products coming into the United States,” he wrote, according to AFP.

He said the new tariffs would remain in place “until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”

The President ignored the US, Mexico and Canada three-decade-old free trade agreement, now called the USMCA.

In another post, Trump said he would also be slapping China with a 10% tariff, “above any additional Tariffs,” in response to what he said was its failure to tackle fentanyl smuggling.

“No one will win a trade war,” Liu Pengyu, a spokesman for China's embassy in the United States, told AFP by email, defending Beijing's efforts to curb fentanyl smuggling.

“China believes that China-US economic and trade cooperation is mutually beneficial in nature,” Liu added.

Canada said it was “essential” to US energy supplies, and insisted the relationship benefits American workers.

“We will of course continue to discuss these issues with the incoming administration,” said the statement from Deputy Prime Minister Chrystia Freeland.

Tariffs are a key part of Trump's economic agenda, with the Republican vowing wide-ranging duties on allies and adversaries alike while he was on the campaign trail.

Many economists have warned that tariffs would hurt growth and push up inflation, since they are primarily paid by importers bringing the goods into the US, who often pass those costs on to consumers.

But those in Trump's inner circle have insisted that the tariffs are a useful bargaining chip for the US to push its trading partners to agree to more favorable terms, and to bring back manufacturing jobs from overseas.