The chief economist of Saudi Arabia's National Commercial Bank urged the government to consider altering the riyal's peg to the U.S. dollar, and to diversify its assets by setting up a sovereign fund to boost returns and reduce exposure to the U.S. currency, The Financial Times reported Sunday.
The statement comes amid intense pressure on the government to tackle rising inflation and consider the first riyal revaluation in 21 years. The bank had previously ruled out changing the peg, saying the effect of dollar weakness on inflation was relatively small, according to the newspaper.
However, NCB Chief Economist Said Alshaikh said it was time to reconsider "provided that it is done gradually," arguing the effect of inflation had extended to the middle class and was no longer confined to the lower-income population.
The government owns approximately 80% of NCB, but Alshaikh's comments do not represent official policy, The Financial Times reported. However, he is thought to be the first prominent Saudi banker to urge the authorities publicly to create a sovereign fund.