The Saudi Arabian interbank rate hit its highest level in over two decades and, with credit growth in the Kingdom slowing, pressure is likely to mount on the Saudi Central Bank to intervene and inject liquidity. Elsewhere, the past week has brought further evidence that the foreign currency shortage in Egypt is hitting economic activity. A devaluation of the pound and interest rate hikes are needed to attract capital inflows to alleviate concerns of a FX liquidity crunch. Finally, Saudi Arabia rolled over its voluntary 1mn bpd oil output cut for another month underscores that it remains focused on propping up prices. However, this risks reigniting tensions with the UAE.
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