DUBAI, (Reuters) – Money supply growth in Saudi Arabia, which is tackling its highest rates of inflation in at least 30 years, picked up pace in May as investments in demand deposits surged, central bank data showed on Thursday.

M3, the broadest measure of money circulating in the economy, jumped 21.64 percent on May 31 to 844.40 billion riyals ($225.2 billion) compared with 694.18 billion riyals a year earlier, the Saudi Arabian Monetary Agency said on its website.

Saudi money supply grew 19.33 percent in April, falling below 20 percent for the first time since December.

A 30.6 percent jump in demand deposits to 344.44 billion riyals drove May money supply, while investments in time and savings deposits climbed 14 percent to 283.98 billion riyals, the central bank said in a monthly report.

Narrow money, or M1, rose to 418.87 billion riyals in May from 329.69 billion riyals a year earlier, it added.

Inflation in the world’s largest oil exporter, which pegs its riyal currency to the dollar, hit 10.5 percent in April as price rises accelerate across the region.

Dollar pegs in most Gulf Arab states have compelled regional central banks to track seven U.S. interest rate cuts since Sept. 18, even though their economies are booming on a near seven-fold rise in oil prices since 2002.

The U.S. Federal Reserve held its key interest rate at a meeting on Wednesday.

In an effort to curb lending growth, the Saudi central bank has raised bank reserve requirements three times since November to 12 percent from 7 percent.

To defend its dollar peg, the kingdom has also tried to offset the impact of inflation on its people by introducing cost-of-living allowances for state employees, slashing import duties and boosting subsidies.

The central bank’s net foreign assets jumped 49.9 percent in May to 1.35 trillion riyals compared with 903.44 billion riyals a year earlier, the data showed.