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Saudi Arabia’s decision to hike energy prices raise its credit rating

SAMA to maintain currency peg at SAR3.7500 per dollar

Moody’s, the credit rating agency, confirmed that Saudi Arabia’s decision to increase energy prices is a positive step for the Kingdom’s rating.

Meanwhile, Fahd bin Abdullah Al-Mubarak, the governor of Saudi Arabian Monetary Agency (SAMA), has reiterated the agency’s official position that it will uphold its mandate of maintaining the currency peg at SAR3.7500 per dollar, backed by the full range of monetary policy instruments, including its foreign exchange reserves.

Al-Mubarak said: “’We have observed recent volatility in the $/SAR forward market due to the mispricing linked to market operators’ misperception about the Kingdom of Saudi Arabia’s overall economic backdrop. Factors affecting the forward market are largely speculative in nature. The Kingdom of Saudi Arabia’s key economic and financial indicators are stable as reflected by its net creditor position, with a sound and resilient banking system.”

It is noteworthy that the World Bank recommended that Saudi Arabia should ditch its dollar peg, while many Saudi experts confirmed that the continuation of the peg, gives positive results to the Saudi economy.