World
Saudi Arabia, Gulf countries follow US Fed quarter-point hike to protect currency peg
Central banks in the Gulf including in Kuwait and Saudi Arabia matched the Federal Reserve’s 25 basis-point rate increase on Wednesday as they aim to protect their currencies’ peg against the US dollar.
Although inflation is relatively muted in the wider Gulf region in comparison to the US and Europe, regulators have little room to maneuver when it comes to monetary policy due to the greenback-pegging policy.
For all the latest headlines follow our Google News channel online or via the app.
They tend to move in lockstep with the US central bank decisions with most regulators in the region following the Fed’s rate hikes this year.
Saudi Arabia increased its repo rate a quarter percentage point to 6 percent and its reverse repo rate to 5.5 percent.
Kuwait matched the Fed’s 25 basis-point increase for the first time in months. It raised its discount rate to 4.25 percent from 4 percent.
The Gulf country maintains a peg to a basket of currencies thought to be dominated by the dollar.
Bahrain increased its one-week deposit rate by 25 basis points to 6.25 percent, its overnight deposit rate to 6 percent but maintained its four-week deposit rate at 6.75 percent.
Qatar raised its lending rate 25 basis points to 6.25 percent, its deposit rate to 5.75 percent and its repo rate to 6 percent.
The UAE increased its overnight deposit rate to 5.4 percent from 5.15 percent.
Read more:
Dozens protest in front of Iraq central bank after US blacklist of Iraqi banks
US Federal Reserve raises interest rate to highest in 22 years