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RIYADH: ����ֱ��’s money supply rose to a record SR3.12 trillion ($832 billion) in June, marking a 7.63 percent annual increase, driven predominantly by a sharp rise in time and savings deposits. 

According to data from the Saudi Central Bank, also known as SAMA, these income-generating accounts, now totaling around SR1.1 trillion, represent the highest share of the money supply in 16 years. 

While demand deposits — non-interest-bearing checking accounts — remain the largest component at 47.93 percent, or SR1.49 trillion, their growth at 5.2 percent year on year has lagged that of savings accounts, which grew 21.71 percent over the same period. 

Other quasi-monetary instruments, including residents’ foreign currency deposits, marginal deposits related to letters of credit, outstanding remittances, and repo placements, account for roughly 9 percent of the money supply. 

However, this category declined 18.54 percent, dropping to SR280.54 billion. Meanwhile, currency outside banks, although the smallest component at 7.83 percent, increased 6.6 percent to SR244.31 billion. 

Why are time deposits surging? 

Global monetary tightening and attractive yields are key factors. After previously peaking at 6 percent, SAMA reduced its repo rate in stages, mirroring that of the US Federal Reserve — first to 5.5 percent in September 2024, then further to 5 percent in December 2024. 

Despite these cuts, the current rate remains relatively elevated compared to the prolonged low-rate environment of previous years, making fixed-term, interest-bearing accounts more attractive than demand balances. 

Strong lending growth, particularly in sectors tied to Vision 2030, mortgage financing, and corporate borrowing, has outstripped deposit inflows. As a result, banks face increased funding needs and have ramped up offerings on time deposits to attract liquidity. 

The 2025 International Monetary Fund Article IV Mission noted that while banks maintain strong solvency at 19.6 percent and a healthy return on assets, liquidity pressures are building, and liquid assets relative to short-term liabilities have declined. 

In response, banks are expanding liabilities through bonds, syndicated loans, and certificates of deposit. Notably, net foreign assets turned negative in 2024 for the first time since 1993, highlighting rising external borrowing. 

To address risks, SAMA introduced a 100-basis-point countercyclical capital buffer in May 2025, and the IMF welcomed this step, along with tighter loan-to-value and debt burden measures, plus potential foreign-currency liquidity ratios to bolster financial stability. 

Market analysts foresee continued strength in time and savings deposits. Alvarez & Marsal’s first quarter Banking Pulse reported that deposits rebounded 4 percent quarter on quarter, led by an 8.1 percent increase in time deposits, following a seasonal dip at the end of 2024. 

Likewise, Fitch Ratings, in its March 2025 forecast, projected lending growth of 12–14 percent, led by corporate demand, to continue outpacing deposit growth. 

Fitch expects Saudi banks to issue more than $20 billion in debt this year as they shift toward non-deposit funding. This, coupled with the continued dilution of CASA “current and savings accounts” and competition for funding, may blunt the benefits of lower policy rates on banks’ net interest margins. 

WASHINGTON/BEIJING: The US and China on Monday extended a tariff truce for another 90 days, staving off triple-digit duties on each other’s goods as US retailers get ready to ramp up inventories ahead of the critical end-of-year holiday season.

US President Donald Trump announced on his Truth Social platform that he had signed an executive order suspending the imposition of higher tariffs until 8:01 a.m. Saudi time on November 10, with all other elements of the truce to remain in place.

China’s Commerce Ministry issued a parallel pause on extra tariffs early on Tuesday, also postponing for 90 days the addition of US firms it had targeted in April to trade and investment restriction lists.

“The United States continues to have discussions with the PRC to address the lack of trade reciprocity in our economic relationship and our resulting national and economic security concerns,” Trump’s executive order stated, using the acronym for the People’s Republic of China.

“Through these discussions, the PRC continues to take significant steps toward remedying non-reciprocal trade arrangements and addressing the concerns of the US relating to economic and national security matters.”

The tariff truce between Beijing and Washington had been due to expire on Tuesday at 7:01 a.m. Saudi time. The extension until early November buys crucial time for the seasonal autumn surge of imports for the Christmas season, including electronics, apparel and toys at lower tariff rates.

The new order prevents US tariffs on Chinese goods from shooting up to 145 percent, while Chinese tariffs on US goods were set to hit 125 percent — rates that would have resulted in a virtual trade embargo between the two countries. It locks in place — at least for now — a 30 percent tariff on Chinese imports, with Chinese duties on US imports at 10 percent.

“We’ll see what happens,” Trump told a news conference earlier on Monday, highlighting what he called his good relationship with Chinese President Xi Jinping.

China said the extension was “a measure to further implement the important consensus reached by the two heads of state during their June 5 call,” and would provide stability to the global economy.

Trump told CNBC last week that the US and China were getting very close to a trade agreement and he would meet with Xi before the end of the year if a deal was struck.

“It’s positive news,” said Wendy Cutler, a former senior US trade official who is now a vice president at the Asia Society Policy Institute.

“Combined with some of the de-escalatory steps both the US and China have taken in recent weeks, it demonstrated that both sides are trying to see if they can reach some kind of a deal that would lay the groundwork for a Xi-Trump meeting this fall.”

Trade ‘detente’ continued

The two sides in May announced a truce in their trade dispute after talks in Geneva, Switzerland, agreeing to a 90-day period to allow further talks.

They met again in Stockholm, Sweden, in late July, and US negotiators returned to Washington with a recommendation that Trump extend the deadline.

Treasury Secretary Scott Bessent has said repeatedly that the triple-digit import duties both sides slapped on each other’s goods in the spring were untenable and had essentially imposed a trade embargo between the world’s two largest economies.

“It wouldn’t be a Trump-style negotiation if it didn’t go right down to the wire,” said Kelly Ann Shaw, a senior White House trade official during Trump’s first term and now with law firm Akin Gump Strauss Hauer & Feld.

She said Trump had likely pressed China for further concessions before agreeing to the extension. Trump pushed for additional concessions on Sunday, urging China to quadruple its soybean purchases, although analysts questioned the feasibility of any such deal. Trump did not repeat the demand on Monday.

“The whole reason for the 90-day pause in the first place was to lay the groundwork for broader negotiations and there’s been a lot of noise about everything from soybeans to export controls to excess capacity over the weekend,” Shaw said.

Ryan Majerus, a former US trade official now with the King & Spalding law firm, said the news would give both sides more time to work through longstanding trade concerns.

“This will undoubtedly lower anxiety on both sides as talks continue, and as the US and China work toward a framework deal in the fall,” he said.

Imports from China early this year had surged to beat Trump’s tariffs, but dropped steeply in June, Commerce Department data showed last week.

The US trade deficit with China tumbled by roughly a third in June to $9.5 billion, its narrowest since February 2004. Over five consecutive months of declines, the US trade gap with China has narrowed by $22.2 billion — a 70 percent reduction from a year earlier.

Washington has also been pressing Beijing to stop buying Russian oil to pressure Moscow over its war in Ukraine, with Trump threatening to impose secondary tariffs on China.