DUBAI — The central bank interest rate for borrowing in Saudi Arabia rose to a record high in July, Bloomberg reported on Tuesday, which will make it more difficult for businesses to borrow money and could offset the kingdom’s goal of attracting foreign firms.
The Saudi Arabian Interbank Offered Rate (SAIBOR) — the interest rate at which contributing banks can borrow funds — climbed above an average of 6% in July, Bloomberg reported on Tuesday. This is higher than the rate during the global financial crisis in 2008, which was below a 1% average in February 2022.
The change can be attributed to ongoing oil production cuts that raised the price of oil in the global market. In addition, the United States Federal Reserve hiked interest rates last week with the aim of lowering inflation.
SAIBOR is published by the Saudi Central Bank, better known as SAMA, which followed the US Federal Reserve last week along with other Gulf banks in raising its key rates by 0.25%. Although Saudi inflation has been well below that of the United States, reported Bloomberg, the kingdom follows the American Federal Reserve closely, with the Saudi riyal being pegged to the US dollar since 1986.
