Saudi Arabia's Central Bank Governor Hamad Saud Al-Syyari said Wednesday the world's largest oil exporter would maintain its currency policy of pegging the riyal to the U.S. dollar.

    Syyari was speaking at a press conference to release the central bank's annual report.

    He said although the riyal's interest rates overtook the dollar's for the first time in 17 months following the U.S. Federal Reserve's decision to cut the interest rates by 50 basis points on Sept. 18, Saudi Arabia would not follow suit to cut the riyal's interest rates because it wants to curb inflation.

    It will also not unpeg the riyal from the dollar as Kuwait did in May.

    The governor said that despite a rapid and stable economic growth rate of 4.3 percent in 2006, Saudi is faced with high inflation pressure, with prices seeing fast rises and some merchants engaging in speculative hoarding of goods.

    As a result of soaring domestic inflation rates, the riyal was traded at 3.7405 U.S. dollars on Sept. 20, a record high in 21 years, fuelling speculation that the world's top oil producer would unpeg its riyal from the dollar and peg it to a basket of major currencies.