MANAMA: Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa said the monetary policy adopted by the Central Bank of Bahrain (CBB) seeks to stabilise the exchange rate of the Bahraini dinar against the US dollar.

This policy has been followed for a long time in order to maintain the stability and steadiness of foreign financial transactions, smoothly and transparently, in a manner that enhances trust in the banking system and transactions in Bahraini dinar in the local market, he pointed out.

In response to a question by MP Ali Zayed regarding monetary and financial policies to curb inflation, the minister said this policy has proven successful over the past decades to reduce risks of exchange rate fluctuations and their negative repercussions on the local economy.

One of the monetary policy tools used locally consists of setting the interest rate on deposits in dinars, which the CBB adjusts from time to time according to economic conditions to limit the expansion in money supply and demand for borrowing, thus contributing to dealing with financial inflation resulting from the expansion of borrowing and increasing credit risks, he said.

He added that last March the CBB raised interest rates on the Bahraini Dinar by 0.25pc, so, the official interest rates on deposits reached 1.25pc for one week and 1.75 pc for four weeks.

He stated that the recent rise in commodity prices is due to two main factors – the effects of the coronavirus pandemic and the war in Ukraine – both of which affected chains in supply and demand for food commodities and other industrial products, and that the reasons that led to the rise in prices is caused by external factors that are difficult to control.

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