Saudi Arabia’s central bank foreign assets drop by $6bn in July

Net foreign assets at Saudi Arabia’s central bank fell to $555 billion in July, down $6bn from the previous month, as the government drew on reserves to cover a budget deficit caused by low oil prices, official data showed on Sunday.

Assets shrank by 16 per cent from a year earlier to their lowest level since February 2012. They reached a record high of $737bn in August 2014 before starting to fall.

The assets are believed to be mainly denominated in US dollars, in the form of securities such as US Treasury bonds and deposits with banks abroad.

Those deposits fell by $8bn from the previous month to $125bn in July, but holdings of foreign securities rose by $2bn to $371bn after shrinking for 10 straight months. The central bank did not disclose details of its securities purchases.

The government has also been borrowing domestically and abroad to cover part of its deficit, which totalled nearly $100bn last year.

Bankers expect it to conduct its first international bond issue to raise about $10bn or more by the end of October.

Follow The National's Business section on Twitter