JEDDAH, 12 April 2008 — The effect of the Saudi riyal being pegged to the weakening US dollar is posing a dilemma to several expatriate workers in the Kingdom, who are either silently suffering the erosion of their incomes or quitting their jobs and going back to their native countries.

Abdul Haq Al-Tazi, a Moroccan accountant working in a private company, said he almost decided not to return after his vacation. He has been forced to reconsider the move because of the dwindling exchange rate of his riyal-based income compared to the currency in his home country.

The SR1,000 he used to send to his family in Morocco used to have an exchange value of 3,000 Moroccan dirhams. Today that SR1,000 fetches only about 2,000 dirhams, Tazi said.

“This fall in my income is because of the euro to which the currency of my country is linked while the value of US dollars, to which Saudi riyal is pegged, is falling. Now I have to send home almost SR1,500 every month to compensate for the shortfall,” Tazi said. He added that his employer did not raise his salary to compensate for the loss that began to be largely noticeable over the past several months. “Since the situation is getting worse I am thinking of leaving for my country where I can at least live with my family,” Tazi said.

Tazi is not the only Moroccan who is considering leaving Saudi Arabia due to the weakening currency and the refusal of employers to raise salaries to compensate for the current problems caused by the riyal-dollar peg. Anas ibn Zaydoun, another Moroccan working in a tourism firm in Jeddah, said he has decided to leave.

“I told my employer not to renew my work contract if the loss in my salary is not compensated,” Zaydoun said. “I am leaving only because of the present financial difficulties. The gap between the exchange rates of the currencies of the Kingdom and my country is widening on a daily basis, making life extremely difficult for my family and me. A single euro was $1.2 two years ago and now you have to pay $1.57 to get a euro. While I could buy a moderate apartment for SR80,000 in my hometown two years ago now I have to pay the equivalent of SR150,000 for the same. On the other hand I have not received any corresponding pay raise.”

The inflationary factors have cut the income of the European expatriates working in the Kingdom roughly around 50 percent in real terms over the past 10 years.

There are also companies that complain about the losses they suffer because of the currency exchange problem. Mirah, director of a surveying firm, said he replaced the services of some European firms in the field of geological survey with the services of Asian companies to offset the exchange rate loss in dealing with European firms.

However, he said he had to raise the salaries of Europeans working in his company as they complained about the adverse effects of the falling value of the riyal.

However, American workers in the Kingdom have not felt the difference very much, according to Dr. Michel Hanna, an American doctor of Egyptian origin working in Jeddah.

“The exchange rate between riyal and dollar is fixed and our remittances have not been affected by the fluctuating dollar price,” Hanna said. The falling dollar rates have also not affected Egyptian expatriates as the exchange rates of riyal against Egyptian pounds remain mostly the same.

On the other hand Indian and Pakistani expatriates have been complaining that they have suffered between a 11 and 7 percent loss in their remittances over the past year. Thus facing a similar dilemma as many expatriates on whether to stay or go.