SAMA ends repo agreements to maintain monetary stability

The Saudi Arabian Monetary Authority (SAMA), the Kingdom’s central bank, will no longer offer repurchase agreements for 7-, 28- and 90-day periods to “enhance” monetary stability, it said in a statement.

The announcement comes after the decline of short-term Saudi money market rates below US rates for the first time in nine years.

The repos were a way for the central bank to lend short-term money to banks. When the repos were introduced in late 2016, the Saudi banking system faced a liquidity squeeze due to low oil prices.

The central bank will continue to use one-day repos, which it has done in the past to cope with sudden shortages of liquidity at individual banks.