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The official currency in Saudi Arabia is the Saudi Riyal (SAR). The Saudi Arabian Monetary Agency (SAMA) is responsible for monetary policy.
There are no restrictions as to the holding of foreign currency in Saudi Arabia, and foreign currency accounts are widely available at Saudi banks.
The Saudi Riyal is pegged to the US dollar, at a rate of 3.75 Riyals per US dollar. The fixed exchange rate has been in place since 1986.
As the SAMA is exclusively focused on maintaining the USD/SAR exchange rate, there is no inflation targeting in Saudi Arabia. Consequently, the inflation rate may be allowed to be quite volatile, depending on the US dollar’s position on the global markets.
Since the 2008 crash, central banks around the world have been keeping interest rates at very low levels, which is ultra-loose monetary policy. As interest rates tend to be below Saudi Arabia’s inflation rate, this is bad for savers. Should the world’s central banks revert to tighter monetary policy, Saudi Arabia should follow.
Implications for expats
As Saudi Arabia strictly follows a fixed exchange rate versus the US dollar, expats coming to Saudi Arabia have the same foreign currency exposure as expats coming to the US.
Consequently, US expats in Saudi Arabia are not exposed to any exchange rate fluctuations. They just have to exchange their US dollars for Saudi Riyals to pay their bills in Saudi Arabia.
Sections in FINANCIAL CONSIDERATIONS IN SAUDI ARABIA:
» Money Transfers for Expats in Saudi Arabia
» Foreign Exchange for Expats in Saudi Arabia
» Banking for Expats in Saudi Arabia
» Pensions for Expats in Saudi Arabia
» Investment for Expats in Saudi Arabia
» Wealth Management for Expats in Saudi Arabia
» Property Investment for Expats in Saudi Arabia
» Insurance for Expats in Saudi Arabia
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If you are considering moving to Saudi Arabia or are soon to depart, you can find helpful information and advice in the Expat Briefing dedicated Saudi Arabia section including; details of immigration and visas, Saudi Arabian forums, Saudi Arabian event listings and service providers in Saudi Arabia.
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