write 4 pages about interest rate in saudi arabia.

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Introduction 
Saudi Arabian Monetary Agency also known as SAMA is the central bank of 
Kingdom of Saudi Arabia. The following are the important activities of SAMA: Issuing the 
national currency, supervising the commercial banks Banker for the government, Managing 
country’s foreign exchange reserves, and economic stability through monetary policy and 
Promotion of growth of financial system with stability.  Changes in the interest rate through 
which changes in the money supply is the way every central bank try to influence the 
economy. Various tools are there at the disposal of SAM to achieve short term and long term 
economic goals. One such tool is the discount rate and this the rate charged by central bank 
when commercial banks borrow money from it. In Saudi discount rate is known as the repo 
rate. The most important tools of SAMA for achieving economic stability are the exchange 
rate and monetary policy.  With regard to monetary policy, the repo rate is the most important 
tools of SAMA which is used to influence the short term interest rate and inflation. Repo rate 
is the discount rate at which SAMA repurchases government securities from commercial 
banks if there is shortage of liquidity in the financial system. The current Saudi Arabian repo 
rate is 2%. Repo Rate and Reverse Repo Rate are being used by SAMA to influence the day 
to day liquidity requirement of the Saudi Arabian financial market and its overnight interest 
rate. Reverse repo is the exact opposite of repo. In reverse repo transaction SAMA sells 
government securities to commercial banks to borrow money from them if there is excess 
liquidity in the financial system. Repo rate is always higher than the reverse repo rate. When 
these two key rates are changed the Saudi Arabian interbank offer rate often follows quickly 
to these changes.

write 4 pages about interest rate in saudi arabia.

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