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Saudi Key Rate Climbs to 2009 High as Funding Squeeze Tightens

  • Three-month interbank offered rate up 46 bps this year
  • Reflects slower deposit growth, higher government borrowing
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A key interest rate in Saudi Arabia climbed to the highest level in seven years as oil’s slump and increased government borrowing put further strain on bank funding in the biggest Arab economy.

The three-month Saudi Interbank Offered Rate, a benchmark used to price loans, advanced 1.5 basis points to 2.004 percent on Sunday, surpassing 2 percent for the first time since January 2009, according to data compiled by Bloomberg. The rate has risen 46 basis points this year, the biggest increase for the period since 2005, the data show.