Saudi Arabia's central bank governor said on Monday recent volatility on its currency in the forwards market is due to speculation based on unrealistic expectations.

The Saudi riyal hit a record low on January 7, amid renewed speculation that the kingdom may be forced to depeg the riyal from the US dollar due to sliding oil prices and the subsequent strain on Saudi state finances.

The Saudi Arabian Monetary Agency (Sama) noticed of late "volatility in the Saudi riyal forward market against the US dollar, which is based on expectations that are not correct by some of the participants in the market on the general economic situation in the Kingdom of Saudi Arabia," Governor Fahad Al-Mubarak said in a statement on Sama's website.

Al-Mubarak added Sama's policy of linking the Saudi riyal at 3,7500 to the US dollar was supported by a raft of financial policy tools including its foreign currency reserves.  - Reuters