Saudi Arabia's biggest commercial bank cut its quote for three-month money in the interbank market on Sunday in a signal that rates could fall further as a liquidity crunch in the banking system eases. The National Commercial Bank, Saudi Arabia's biggest commercial bank, quoted three-month SAIBOR at 2.10% on Sunday, down from the 2.15%, which it had quoted throughout this month. In the past four weeks, rates have been falling by around 1 or 2 bps each day, with three-month SAIBOR dropping back to 2.134% on Sunday from 2.148% at the end of last week. Pressure on liquidity has been eased by the finance ministry's decision not to make a monthly issue of domestic bonds in October. It has not yet said whether it will resume issuance this month. The need for the government to sell debt domestically has been reduced, for now at least, by the government's success in issuing USD17.5bn of bonds overseas last month in its first international bond sale. A central bank official said last week that the proceeds of the foreign bond sale had not yet been deposited in local banks. Bankers believe that if they are, that could provide a big boost to liquidity. The government has also improved liquidity conditions in the banking sector by releasing payments of money that it owed to private sector companies and delayed paying for months. (Reuters)