JEDDAH, 26 December — The financial markets in the Kingdom will begin transactions in euro, the new European single currency, as a legal tender from Jan. 1. This will allow Saudi businessmen who import from 12 leading industrial nations of Europe to deal in a single currency. The move coincides with the EU’s decision to make euro a fully operational legal tender on New Year’s Day.
Leading Saudi importers actually started using euro when the Ministry of Finance and National Economy had decided early this year to allow all the ministries and government departments to deal in the new currency along with other legal tenders. Euro will be available in local markets simultaneously with its launch in Europe and other countries in January.
Banking sources in the Kingdom do not anticipate any difficulty for the public in their transactions using the new currency because euro has already been in use in paper transactions and the market has been prepared for the transition.
"The new European currency has not reached the local banks as of yet. However, we are ready to deal in it," said an expert at the National Commercial Bank. He hoped that it would be available in the banks shortly.
"Dealing in one currency instead of 12 currencies in Europe will simplify business operations. It will minimize losses caused by currency fluctuations," a leading Saudi importer said. He hoped that its exchange rate will go up with the decision of the British government to join the common currency.
The Saudi Arabian Monetary Agency, the central bank of the Kingdom, has taken necessary steps to interact with the new common currency since its official launch on Jan. 1, 2001. SAMA used to include the exchange rates of euro in its periodic bulletins issued to local banks and other financial institutions. On Jan. 1 this year, a euro was traded at SR3.5621, according to Al-Rajhi Banking and Investment Corporation.
The local banking sources are upbeat about the new currency as they hoped that it would help promote Saudi-European trade. Economists believe that a common currency will be favorable for the Saudi importers and will increase the demand for European goods in the domestic markets because of the ease with which deals can be handled in 12 EU member states.
