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JEDDAH, 19 November 2004 — The Saudi riyal, which has been pegged to the US dollar, is stable despite the continued decline of the American currency, the governor of Saudi Arabian Monetary Agency, Hamad Al-Sayyari, has said. “The fall in dollar prices will not affect the actual value of riyal or inflationary rates,” the governor said, adding that it will have only a limited effect on prices of goods in Saudi markets. “I don’t think the falling dollar will have any big impact as most of our international trade is done in dollars,” Al-Watan Arabic daily quoted him as saying. However, Sayyari said it would affect goods that are priced in currencies other than the dollar. “As a result of open market and globalization, most goods are priced in dollars, including a substantial amount of goods that are imported from Europe and Japan,” he said. Exporters in non-dollar countries will take into consideration the fall in prices and this will reduce the impact on prices of goods. “I believe that only some goods will be affected and the majority will be unaffected.” But Saudi analysts said four economic sectors in the Kingdom — imports and exports, tourism, foreign investment, and maintenance and spare parts — would be affected the most by the falling dollar. “The import and export sector will be the worst affected,” said economist Dr. Yasin Al-Jefry. “The price of any product imported in the country, using currency other than the dollar, will go up,” he pointed out. This will naturally result in increasing prices of imported goods in the Kingdom. Saudi riyal has been linked to the dollar since 1986. Last year the exchange rate between the two was officially fixed at SR3.75 for one dollar. The stability of the riyal against the dollar as well as the recent economic reforms, the improvement in balance of payment have increased the confidence of Saudi and foreign investors and the business sector in the riyal. SAMA closely supervises the exchange rate of riyal and takes necessary measures to ensure its stability. Meanwhile, the euro weakened slightly against the dollar in London yesterday after soaring to a record earlier in the day as traders positioned themselves ahead of a weekend meeting of Group of 20 finance ministers and central bankers in Berlin. The single European currency in late day trade was at $1.2981, down from 1.3031 late Wednesday in New York. The euro at one point shot up to a record $1.3074. Against the yen the greenback was trading at 104.30 against 104.05 on Wednesday. While the G-20 meeting was not expected to deal directly with currencies, analysts predicted the issue would be raised on the sidelines, especially at news conferences. US Treasury Secretary John Snow gave no signal yesterday of a shift in the US dollar policy. “Everybody knows what our position is — a strong dollar, (and) currency values set in open markets,” Snow said. On the London Bullion Market, the price of an ounce of gold stood at $442 against $443.45 late on Wednesday. However, oil prices continued their decline yesterday after a brief rally on the back of renewed concerns over heating oil stocks in the United States fizzled out. — Additional input from agencies. |
