Saudi Arabia’s official reserve assets highest in 19 months at $467.76bn

RIYADH: Saudi Arabia’s official reserve assets reached SR1.754 trillion ($467.5 billion) in June, the highest in 19 months and a 5.54 percent increase year-on-year, according to new data. 

The Saudi Central Bank, known as SAMA, reported that these holdings include monetary gold, special drawing rights, the International Monetary Fund’s reserve position, and foreign reserves. 

International currency holdings, which contain currency and deposits abroad and investments in foreign securities, made up 95 percent of the total, amounting to SR1.66 trillion in June. This category also saw a 6 percent increase during this period. 

Saudi Arabia has one of the highest reserve coverage ratios among Fitch-rated sovereigns, standing at 16.5 months of current external payments, according to an agency report published in February. 

This ratio indicates the country’s robust ability to meet its external financial obligations for an extended period, reflecting strong economic stability and prudent management of its foreign exchange holdings. 

This high level of reserves provides a significant buffer against external shocks and underpins investor confidence in the Saudi economy. 
June data showed that special drawing rights, making up 4 percent of the total at SR77.24 billion, decreased by 1.3 percent. 

Created by the IMF to supplement member countries’ official reserves, SDRs derive their value from a basket of major currencies, including the US dollar, euro, Chinese yuan, Japanese yen, and British pound sterling. They can be exchanged among governments for freely usable currencies when needed. 

SDRs provide additional liquidity, stabilize exchange rates, act as a unit of account, and facilitate international trade and financial stability. 

The IMF reserve position totaled SR13.33 billion but decreased by 11 percent during this period. This category represents the amount a country can draw from the IMF without conditions. 

Since its inception in 1952, SAMA has been managing foreign exchange reserves, with significant scale management beginning in the 1970s. 

According to the Bank for International Settlements, SAMA’s reserves management has evolved as it accumulated holdings and gained expertise over time. 

It has also developed internal models to validate reserve adequacy and assess reserve requirements, taking into consideration global practices and incorporating specific macroeconomic factors relevant to Saudi Arabia. 

These models are regularly back-tested to ensure their reliability. 

According to the BIS, SAMA has three primary investment objectives: preserving capital, maintaining liquidity, and achieving returns compatible with its risk appetite.