Saudi Arabia, the biggest economy in the Gulf and the world’s largest supplier of oil, on Tuesday was reported to have deposited $2bn-$3bn in local banks to meet a shortfall of dollar funding in the domestic banking sector.

Despite the danger of further stoking inflation by recycling petrodollars into the economy, the Saudi Arabian Monetary Agency, the central bank, has moved to help banks overcome tightness in local currency money markets and frozen international debt markets.