The drop in the Saudi central bank’s foreign assets to a 14-year low in July caused some concern this week, but we suspect this reflects funds being recycled to the Public Investment Fund rather than moves to protect the dollar peg. Meanwhile, the government increased funding for state-backed mortgage providers to reinvigorate the market which is grinding to a halt on the back of tighter monetary conditions. Elsewhere, Egypt’s new plan to provide tax exemptions for new industry projects adds to hopes of raising foreign direct investment into the economy. But it may also reignite fears about the commitment to tight fiscal policy and sovereign default.
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