Dollar declines as Saudis withdraw billions from US By Javid Hassan & Omar Al-Zobaidy RIYADH, 22 August — The US dollar yesterday fell from recent highs against the euro and yen following a report that Saudi investors were pulling billions of dollars out of the United States. London’s Financial Times earlier said Saudi investors have withdrawn the funds from the United States because of concerns their assets might be frozen. The paper quoted Youssef Ibrahim, a senior fellow at the US-based Council on Foreign Relations, as saying Saudis have pulled out at least $200 billion from the United States in recent months. A high-ranking official of the Saudi Arabian Monetary Agency confirmed that $200 billion have been withdrawn by Saudi businessmen from the United States. But he denied that the money has been deposited in Saudi banks. The Financial Times quoted Ibrahim as saying the withdrawal had been fueled by calls from some hard-liners in the United States for a freezing of assets held by investors from Saudi Arabia. He said the outflows could pick up in response to the legal action launched last week in the United States against Saudi citizens and organizations, Sudan and several Gulf banks and charities by relatives of the victims of the Sept. 11 attacks. The suit accuses them of covertly financing the Al-Qaeda network and seeks $1,000 to $3,000 billion in punitive damages for each of the 14 counts from 99 organizations or individuals. It also seeks $100 trillion in damages from Sudan. According to the Financial Times report, investors are believed to be shifting funds out of US private equity, stocks, bonds and real estate into European accounts. But it added that some bankers in London said the largest established Saudi investors did not yet appear to be shifting money out of the United States. It quoted one unnamed banker as saying: "I’m skeptical about a mass exodus. But there was a lot of Saudi money with American banks that was not diversified, now they (the Saudis) are spreading their wings. Perhaps 30 percent to 50 percent of the money that was with US banks is seeking diversification." Saudi investors have registered their concerns over the campaign of criticism against Saudi Arabia in the United States. "It is making our customers paranoid," said a senior banker with a US bank overseeing billions in Saudi assets mainly in the United States. A cross section of Saudi businessmen, investors and financial advisers welcomed the withdrawal and said European banks could be the major beneficiaries of this huge repatriation of funds unless the Gulf and Arab states streamlined their own economies and created an environment conducive to the inflow of overseas funds. Commenting on the unprecedented step taken by Saudi investors, Bishr Bakheet, well-known financial adviser, told Arab News that it is estimated that Arabs had invested $1.3 trillion outside the Arab world. "This figure is based on the analysis conducted by Merrill Lynch/Gemini Consultancy. According to them, it is estimated that Saudis have invested more than $700 billion in the United States." Bakheet said that of late the US economy had been showing signs of weakness which had been mirrored in its negative performance even prior to Sept. 11. "It is for this reason that many institutions had started to reduce their investments in the US market, especially after Sept. 11." The situation, he said, was compounded by the onslaught on Arabs and Muslims in the US in the wake of Sept. 11 which, together with the collapse of Enron, WorldCom and other US corporations, jolted the Saudi investor confidence. http://www.arabnews.com/Article.asp?ID=17989