Saudi central bank May net foreign reserves drop 1% to $672bn

Net foreign assets at Saudi Arabia’s central bank fell to SAR 2.521 trillion ($672.2 billion) in May, down by $6.6bn or 1.0 per cent from the previous month as the kingdom continued to draw down reserves to cover a budget gap caused by cheap oil.

Assets dropped by 8.1 per cent from a year earlier to their lowest level since April 2013, central bank data showed on Tuesday.

The central bank serves as the country’s sovereign wealth fund, storing its earnings from oil exports. Assets’ year-on-year drop is partly due to the strong U.S. dollar, which has cut the value of the portion denominated in non-dollar currencies, but a major part is due to a fiscal drawdown, analysts say.

Assets fell by $11.8bn in April from the previous month, by $16.0bn in March and by $20.2bn in February. They peaked at a record $737bn last August.