Saudi August foreign reserves at lowest since early 2011

DUBAI, Sept 28 (Reuters) - Saudi Arabia's foreign reserves fell in August to their lowest level since April 2011, central bank data showed on Thursday, drawn down to cover a budget deficit caused by low oil prices. The central bank's net foreign assets shrank by $6.9 billion from their level in July to $480.0 billion. The assets dropped 13.4 percent from a year earlier; they peaked at $737 billion in August 2014. The vast majority of the foreign assets are believed to be denominated in U.S. dollars. Foreign securities holdings dropped only slightly in August, edging down by $264 million from the previous month to $332.6 billion, while foreign bank deposits shrank $6.2 billion to $89.2 billion. Foreign assets dropped in August despite the government's issue of 13 billion riyals ($3.5 billion) of local currency Islamic bonds during the month to cover part of its deficit - a sign that pressure on its finances remains heavy. The central bank data also showed that outstanding bank loans to the private sector in Saudi Arabia fell 1.0 percent from a year earlier in August, a sign of a weak economy. It was the sixth straight month of falling bank lending; loans dropped 1.3 percent in July.

(Reporting by Andrew Torchia Editing by Jeremy Gaunt)