DUBAI (Reuters) - Saudi Arabia's central bank has told banks it is banning the use of options and other derivatives to speculate against the riyal, in a new effort to reduce pressure on its currency peg, a senior executive at a Saudi bank told Reuters on Sunday.

The Saudi Arabian Monetary Agency "wants to make sure that there is no snowball effect against the riyal in the forwards markets", the executive said, declining to be named because of commercial sensitivities.

"So now banks in the country are banned from accepting any options against the riyal." Non-speculative trade in the riyal forwards market is not forbidden, the executive added.

The central bank did not respond to a telephone call to its headquarters seeking comment.

Its order is a renewed attempt to prevent low oil prices, which have saddled Saudi Arabia with big state budget and external deficits, from pressuring the riyal's three-decade-old peg of 3.75 to the U.S. dollar.

In January, commercial bankers in Saudi Arabia said the central bank had contacted them privately and urged them not to conduct derivatives trades against the riyal. The central bank has also been asking banks for information on their trades.

Since January, the riyal has rebounded in the onshore forwards market <SAR1Y=>. But it has remained near multi-year lows in the offshore forwards market <SAR1YD=W>, which is not under the direct control of the central bank, and the cost of insuring Saudi sovereign debt against default <SAGV5YUSAC=MG> has stayed high.

On Monday, the government is expected to announce details of a reform plan designed to reduce the economy's reliance on oil. A general announcement of the plan's goals in April won praise from foreign economists for its ambition, but was also criticized for lacking detail, which made it difficult to gauge whether the plan was feasible.

(Reporting by Celine Aswad; Writing by Andrew Torchia; Editing by Larry King)