Saudi Arabia’s central bank is not interested in buying distressed or speculative assets such as troubled European debt and gold and the OPEC member’s banks are well positioned to withstand the euro zone crisis, its head said on Saturday. The world’s No. 1 oil exporter like most of its Gulf Arab neighbours is a major holder of dollar assets as its riyal currency is pegged to the greenback and crude accounts for 85 percent of its budget revenue.
Asked if the Saudi Arabian Monetary Agency had considered buying European sovereign bonds such as Italian ones, Governor Muhammad al-Jasser said: “We do not buy specific bonds at all. We have not done it.
“We always have a much more integrated reserve investment strategy which looks at it in a continuous and dynamic way that values security, safety and liquidity and therefore we do not look opportunistically at distressed assets or special assets that come up one way or the other,” Jasser said after a meeting of the Group of 20 countries in Paris.
The central bank of Saudi Arabia, which is the only Middle Eastern member of the G20 group of developed and emerging economies, rarely comments on its reserve strategy. Gold, which has tumbled from a record high of above $1,920 an ounce, is another asset of little interest to the Saudi central bank due to its volatility, Jasser said.
“We have gold in our reserves but we have not bought and we have not sold it in a very long time. It has become a very speculative asset and we do not get into any speculative assets.”
Asked whether the central bank was going to stick to this strategy, Jasser said: “Yes”. Boosted by robust oil prices of above $100 per barrel this year, the Saudi central bank’s net foreign asset reserves have climbed steadily to a record high of SR1.879 trillion ($500bn) in August. Gold reserves have been unchanged at SR1.556bn since 2008, the central bank’s data show.
Jasser also said US Treasuries continued to be “an important safe haven and major asset” in global financial markets.
“62 percent of global reserves are still in US assets. It is safe to say they are there to stay for a while,” he said. A downgrade of the United States’ top-notch ‘AAA’ credit rating by Standard & Poor’s in August shocked the global markets but had no adverse impact on its bonds.