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Saudi central bank chief vows to keep dollar peg

Currency speculators have put pressure on the riyal in recent months because of the impact of lower oil prices on the country’s fiscal balance

Gulf News

Dubai: Saudi Arabian Monetary Agency (Sama) Governor Fahad Al Mubarak said he was committed to maintaining monetary policy to keep the kingdom’s decades-long currency peg of 3.75 riyals per dollar in comments published on the central bank website on Monday.

Currency speculators have put pressure on the riyal in recent months because of the impact of lower oil prices on Saudi Arabia’s fiscal balance, causing a projected large deficit this year.

“I would like to assure that the monetary agency will continue to manage its monetary policies to achieve the goal of stabilising the value of the riyal at the exchange rate of 3.75 riyals to the dollar,” Mubarak said in a speech published on the website.

While Mubarak has previously pledged to maintain the riyal’s dollar peg, unbroken since 1986, Sama did in January intervene by warning local commercial banks to avoid betting on a currency devaluation.

In order to pay the government’s bills as its oil revenues shrink, Sama has been drawing down its overseas assets at an annual rate of more than $100 billion (Dh367.3 billion), although it still has enough to support the riyal for several years.

In February, Societe Generale said it estimated there was at least a 25 per cent chance of a near-term devaluation of the riyal, rising to 40 per cent is oil prices stayed at current levels throughout the year. Other institutions said they expected Riyadh to maintain its currency peg.

South Africa turns on Saudi-built solar to cut coal reliance

Johannesburg: South Africa and Saudi Arabian ACWA Power launched a $328 million (Dh1.2 billion) solar power plant in the Northern Cape province on Monday, as Africa’s most industrialised country rushes to expand its power supply and cut its coal reliance. The Bokpoort Concentrated Solar Power (CSP) Project, developed by a consortium led by ACWA Power, is set to provide 1,300 megawatts per hour, powering more than 200,000 homes, a statement from media firm OLB said. Construction of the plant began in 2013, following a successful bid by ACWA Power, as part of South Africa’s plan to expand the use of renewable energy.

“It is aimed at providing energy security and diversified energy. It instils confidence that major green projects are going to be built in South Africa,” said the Department of Trade and Industry’s (DTI) deputy director general Yunus Hoosen.

Eskom, which provides virtually all of South Africa’s power, is facing a funding crunch as it races to bring new power plants online.

With year-round sunshine and thousands of miles of windswept coast in South Africa, investors are warming to the renewable energy potential, with 66 projects completed or underway since the government launched a first bid round four years ago.

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