Saudi Arabia's Liquidity Surges To SAR 2.906 Trillion By End Of August 2024

The Saudi economy has witnessed a significant increase in available funds, with liquidity reaching SAR 2.906 trillion by the end of August 2024. This marks an 8.7% rise from SAR 2.674 trillion in August 2023, as per the Saudi Central Bank's (SAMA) monthly report. The broad money supply (M3) reflects this growth, highlighting a strong economic framework.

Liquidity levels also saw a monthly increase of approximately 1.3%, adding SAR 36.848 billion from July 2024, when it was SAR 2.869 trillion. Since January, liquidity has grown by 6.8%, rising over SAR 185.678 billion from SAR 2.72 trillion at the start of the year.

The broad money supply (M3) is composed of four main elements. Demand deposits are the largest component, making up 49.5% and amounting to SAR 1.437 trillion by August's end. Time and savings deposits follow at SAR 929.659 billion, contributing 32% to M3.

Other quasi-monetary deposits form the third-largest segment, accounting for 10.8% or SAR 313.220 billion of M3. Currency in circulation outside banks makes up about 7.8%, totalling SAR 226.392 billion.

Quasi-money deposits include various financial instruments such as residents' foreign currency deposits, secured deposits via letters of credit, ongoing transfers, and repurchase agreements (repos) with private sector banks.

Domestic liquidity is categorised into three measures: M1 includes currency outside banks and demand deposits; M2 adds time and savings deposits to M1; and M3 encompasses M2 plus other quasi-money deposits.

The robust liquidity levels play a crucial role in driving economic growth and development within Saudi Arabia's commercial landscape.

With inputs from SPA