SAMA, which up to now has posted money supply data only on a monthly basis, said it would now post weekly data on its website every Wednesday. “SAMA hopes that the release of these data will achieve the desired goals and help interested professionals follow weekly monetary developments in the Kingdom,” the central bank said in a statement.
M3, the broadest measure of money circulating in the Saudi economy, rose 5.3 percent from the end of December, SAMA said.
Money supply stood at SR982.1 billion in the week ended March 26, it said.
“SAMA’s move is demonstrative of its drive to be transparent in a region that is driving away from transparency. From an economics perspective the availability of weekly money supply figures adds to data about the flow of money into the economy. There is an element of cyclicality that we have to take note especially as there is public sector payments that are made on a Hijrah calendar that will be reflected on the money supply data that amount to more than SR11 billion-SR12 billion every month as well as private sector payments,” John Sfakianakis, chief economist at SABB (Saudi British Bank) said.
He said a change in money supply over a prolonged period should signal some kind of a downward or upward pressure on inflation. Also, monetary growth is a good leading indicator of economic activity. For example, in some countries there is a clear link between the growth in broad money supply (M3) and real GDP (gross domestic product). Of course, weekly figures, over time, could point to the effectiveness of monetary policy.
“SAMA’s move should be heeded by others in the region especially Qatar that published money supply figures in August and the UAE that has last published such figures in September. There is a huge data gap that has to be filled by some of the other regional economies, especially as we move closer to monetary union and harmonized rules and regulations,” Sfakianakis said.
Annual money supply growth, an indicator of future inflation, has eased in the world’s top oil exporter in recent months from levels above 20 percent for much of last year.
Inflation in the Kingdom fell to 6.9 percent in February, its lowest level in more than a year.
According to SAMA data, Saudi Arabian money supply growth accelerated to 15.6 percent in February from 13.87 percent in January, its first rise since October. The Kingdom’s money supply was SR928.43 billion in January and SR956.59 billion in February. In 2008, money supply was slightly over SR929 billion.
Meanwhile, SAMA’s net foreign assets continued to decline after recording the first monthly fall in December 2008 since August 2007. SAMA’s net foreign assets declined to SR1.64 trillion at the end of December, from SR1.66 trillion in November. In January, foreign assets fell further to SR1.62 trillion and in February to SR1.58 trillion, according to SAMA’s data available on its website.
