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Open Market Operations

Open Market Operations: Background and Objectives

The Saudi Arabian Monetary Authority has launched complementary open market operations ("OMO") to its current offering of SAMA Bills to enhance short-term liquidity management in the local banking system.

 

What are Open Market Operations?

 OMO are used by SAMA as tools to inject and withdraw short-term liquidity to and from the local banking system, in a manner consistent with its mandate of maintaining monetary and financial stability in the Kingdom.

By launching the latest complementary element, SAMA aims to address potential short-term liquidity needs in the local banking system on a systematic basis. In liquidity injecting transactions SAMA purchases eligible securities, as defined by SAMA's collateral policy, with an agreement to resell the securities at a future date. The difference between the purchase and resale price will reflect the lending rate.

 

How will SAMA determine the short-term liquidity needs of the local banking system?

 SAMA manages short-term system liquidity based on a number of considerations, including, but not limited to, SAMA's assessment of current and projected liquidity conditions as well as desired policy outcome(s).

 

How often will liquidity injecting OMO be offered?

 A certain level of liquidity will be offered regularly via OMO on a biweekly basis. However, SAMA may offer liquidity via OMO on an ad hoc basis if it deems necessary.

 

What are the maturities of the regular liquidity injecting OMO?

Beyond SAMA's standing overnight repo facility, liquidity injecting OMO will be conducted regularly (biweekly) over three different tenors, namely, 7 days, 14 days and 28 days, which together reflect the specific needs of the local banking system.

 

What is the Open Market Operations' pricing?

 Pricing will be determined based on SAMA's assessment of local liquidity needs and desired policy outcome(s).

 

Which parties are eligible to participate in liquidity injecting OMO?

 The eligibility criteria for participating in the liquidity injecting OMO matches those for SAMA's overnight repo facility, such that any entity with a valid SAMA banking license and access to the Saudi Arabian Riyal Interbank Express "SARIE" (i.e. local banks and branches of foreign banks) is eligible.

What is meant by the bulletin of foreign exchange rates against the Saudi Riyal issued monthly by the Saudi Arabian Monetary Authority (SAMA)?

SAMA issues this monthly bulletin for use by government agencies only; it is not intended for the public and it does not reflect the actual index of exchange rates prevailing in the market.

Are the rates issued by SAMA binding to local banks to apply in banking transactions?

Exchange rates fluctuate rapidly and each bank has a certain margin of profit in the process of selling and buying, so rates issued by SAMA are not binding to banks to apply.

What sources on which SAMA relies for issuing foreign exchange rates?

 SAMA depends on global markets through specialized global   information networks such as: Bloomberg and Reuters.

Which entities can request the transfer or issuance of a cheque in foreign currencies through SAMA?

Government agencies and local and foreign banks by cheques drawn on SAMA or by debit entry in an account opened with SAMA.

What are the currencies which SAMA transfers or issues a foreign check in?

SAMA receives requests for transfer or issuance of foreign cheques in all foreign currencies available.

What is the competent department at SAMA that handles transfers or issues cheques in foreign currencies?

It is the Remittances Department. Correspondence is directed to His Excellency Director of the Remittances Department at SAMA headquarters in Riyadh.

What procedures are in place to request the issue of a real estate title deed for a property owned by the title deed which is lost?

1.       SAMA receives letters from a number of official agencies such as courts and Notaries Public enquiring about missing title deeds to issue replacements thereof.       2.  Circulars are sent to banks in three combinations a week, then ten days are set from the date of the circular to provide SAMA with any comments on title deeds mortgaged to them. 3 - After the expiry of the time limit, and, in the event of non-receipt of comments from any of the banks operating in the Kingdom, an answer is provided to all agencies that have already inquired about the missing title deeds.
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