DUBAI: A fall in the holdings of US Treasury bills by Saudi Arabia in 2020 was the result of normal investment management strategy during the volatile market conditions sparked by the COVID-19 pandemic, according to leading economists.

Figures released by the Treasury showed big drops in the Kingdom’s multi-billion dollar holdings of American gilt-edged investments, down $61 billion between March and May to stand at $123.5 billion. Saudi T-bill holdings have since picked up to $137.6bn at the end of last November.

Nasser Saidi, regional economics expert, told Arab News: “This is all about normal cash flow considerations. The period of selling coincided with a period when yields were low and falling, and there was a near collapse in equity markets.”

Another financial expert, who did not wish to be named, said the decline in Saudi holdings in US government bonds was consistent with the Kingdom’s declining foreign reserves, and did not reflect any policy of distancing between the two countries in financial markets.

“Saudi Arabia appears determined to maintain the peg between the dollar and the riyal, and holdings of T-bills will not influence that policy,” he said, pointing to tough fiscal measures taken by the Kingdom during the pandemic recession as evidence of the desire to keep the peg.

Though its holdings have been reduced progressively over recent years, Saudi Arabia remains the 14th largest holder of US Treasury bills, and by far the biggest in the Middle East. Japan and China are the largest, with around $2.3 trillion between them.