Investigating the Possibility of Changing the Saudi Arabian Riyal Exchange Rate Regime

Dimah Althibani (), Hatem Akeel () and Momen Atef ()

Humanities and Social Sciences Letters, 2020, vol. 8, issue 1, 46-61

Abstract: This study examined the determinants of the Saudi riyal real effective exchange rate (REER) and the possibility of changing Saudi Arabia’s exchange rate regime from pegged to floating. A regression model was used to investigate the impact of Saudi Arabia’s total reserves, cost of living, money supply, non-oil exports, interbank lending rate, and crude oil production on the REER. The results revealed crude oil production as the only significant determinant: a 10% increase in production will reduce the rate by 1.32%. Although Saudi Arabia is cannot yet change its exchange rate regime, the goals of Vision 2030 are achieved and Saudi Arabia is no longer an oil-dependent economy, a change may be possible.

Keywords: Exchange rate regimes; Real effective exchange rate; Currency peg; Saudi Arabian riyal; Crude oil revenue; Vision 2030; Currency basket (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:pkp:hassle:v:8:y:2020:i:1:p:46-61:id:839

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