Saudi Arabia’s Money Supply Rises 8.4% in July on Higher Deposits

Saudi Arabia’s broad money supply grew by 8.4 percent in July compared with a year earlier, adding SR239.97 billion ($63.9 billion) to reach SR3.11 trillion, according to official figures released by the Saudi Central Bank (SAMA).

The gauge of liquidity, known as M3, also rose 2.1 percent on a quarterly basis, climbing to SR3.12 trillion by the end of June from SR3.06 trillion in March, the Saudi Press Agency reported. Analysts say the increase reflects SAMA’s balancing act between ensuring adequate liquidity and supporting economic growth under the Kingdom’s Vision 2030 strategy.

Demand deposits continued to make up the largest share of the money supply at 46.5 percent, or SR1.45 trillion. Time and savings deposits followed closely, standing at SR1.12 trillion, or 36.1 percent of the total. Quasi-monetary deposits — which include foreign currency accounts, deposits linked to letters of credit, outstanding remittances, and repurchase agreements with the private sector — reached SR296.72 billion. Meanwhile, currency in circulation outside banks was reported at SR242.34 billion.

The central bank data also pointed to an important trend: a growing shift toward interest-bearing accounts. Time and savings deposits have been expanding at a faster pace than demand deposits in recent months, as higher interest rates encourage savers to lock in returns. In June, M3 reached a record SR3.12 trillion, up 7.63 percent year on year, with savings deposits making up their largest share in more than a decade.

This trend reflects the impact of monetary policy on financial behavior. After peaking at 6 percent, SAMA has cut its repo rate in line with US monetary policy, first to 5.5 percent in September 2024 and then to 5 percent in December. While rates have eased from last year’s highs, they remain elevated compared with earlier periods, continuing to make fixed-term deposits more attractive than non-interest-bearing demand accounts.

The steady expansion of M3 underscores the resilience of Saudi Arabia’s financial system and its capacity to channel liquidity into the economy while encouraging disciplined savings. For policymakers, the challenge lies in maintaining a balance between promoting economic activity and managing inflationary pressures as the Kingdom advances toward its Vision 2030 targets.

Economists note that the structure of deposits is a key indicator of household and business confidence in the financial system, as well as their responsiveness to interest rate movements. The rise in time and savings balances signals both a cautious approach by depositors and a maturing financial market that increasingly aligns with global norms.

With SAMA’s latest figures showing broad-based growth in deposits and liquidity, the Kingdom’s monetary trends continue to reflect both the influence of interest rate policy and the broader economic transformation agenda.