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Currencies |
| SAUDI RIYAL |
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| Introduction
| Overview | Structure
| History | Factors
affecting change in exchange rates | Daily
trend of Saudi riyal | Weekly
trend of Saudi riyal |
| Introduction |
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Riyal is the term given to currencies of various countries lying
in the Arabian Peninsula consisting of Iran, Saudi Arabia, Oman,
Qatar and Yemen. One of the most important riyal currencies of the
countries mentioned is the Saudi riyal that forms national
currency of Saudi Arabia. Saudi riyal is often denoted by the sign
SR in English language or by "ر.س" in
Arabic. The ISO 4217 currency code for the currency is SAR
and the numeric code is 682. The subunit of Saudi riyal is "hallalah".
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Overview
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Saudi Arabia has got about one - fourth share in the total crude
oil and petroleum reserve in the world and that shapes the economy
of the country. More than 70% of the country’s total revenue is
brought in by crude oil and accounts to 90% of the total exports
done by the country. A currency as stable as riyal, does help in
the overall growth of country’s economy. To avoid the
fluctuations in the value of riyal, it was pegged to the US dollar
on a fixed rate regime and continues to follow the peg. The Saudi
riyal is also pegged fixed by the Bahraini dinar with the exchange
rate being 1 dinar = 10 riyals. The exchange rate between US
dollar and riyal is fixed at 1 US dollar = 3.75 riyals.
Also, all the major currencies are accepted
in Saudi Arabia alternatively. There are a few restrictions in
context of import and export of the currency like the import and
export of the local currency is limited up to an amount of 100000
riyals. Exchange of all the other currencies by the way of
import-export is permitted except for the Israel shekel that is
banned in the country.
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Structure
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The official subunit of the Saudi riyal i.e.
"hallalah" was introduced for the
first time in the year 1963, which is 1/100th
part of riyal and it also converted the orthodox
currency system into a decimalized one. The
Saudi Arabian Monetary Agency (SAMA) has
been taking care of flow of currency in the
country since riyal was made the official
currency. The coins too, are minted by SAMA and
are in 5 denominations that are 5, 10, 25, 50
and 100 hallalahs. 1 hallalah coin is also a
legal tender in the country but is not in
circulation.
For denominations starting
from 1 riyal up till 500 riyals, that is the
highest face value in the Saudi Arabian
currency, banknotes are issued by SAMA. The 6
denominations in which the bank notes are issued
are 1 riyal, 5, 10, 50, 100 and 500 riyals. The
commemorative issues of banknotes of the value
20 and 200 riyals are also in circulation. The
different color combinations of the notes
mentioned in the list below help them
differentiate form each other
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1 riyal note - Dark
brown and orange
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5 riyal note - Dark
purple, blue and brown
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10 riyal note - Grey,
brown and purple
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20 riyal note - Grey,
brown, blue and red
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50 riyal note - Green, gray
and blue
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100 riyal note - Green,
purple and blue
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200 riyal note - Green,
red, gray and brown
- 500 riyal note - Blue, green and gray.
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| History |
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The currency riyal owes its origination to the time
when the country Saudi Arabia did not even exist.
Before the 20th century commenced, currencies of the
foreign countries especially Maria Theresa thalers and
British Gold sovereigns circulated and served the
monetary needs in Arabia with the exchange rate of 1
Gold sovereign = 5 Theresa thalers. With the
establishment of two states, The Hejazi kingdom and
the Sultanate of Hejd in quick succession in 1916 and
1921, the need of a common currency was felt. Hejaz
introduced "Hejaz riyal" as its official
currency that was equal to 20 qurush coin that was
further subdivided in 40 para. In 1926, a foreign bank
was established in Jiddah and since then more and more
banks started establishing as the oil business began
to flourish.
Saudi Arabia was established in
1932 when both the states got united to form this new
country and in order to stabilize the monetary units,
a common currency was launched i.e Saudi riyal. The
exchange rate had some corrections later and 1 unit of
riyal was set equal to 22 qurush coins and the same
rate prevailed till, in the end, in 1960 when it was
devalued again to 20 qurush coins and finally in 1963,
the currency was decimalized with the introduction of
a new subunit to the Saudi riyal i.e. "hallalah".
Hallalah divides the riyal into 100 equal parts. In
the meanwhile, in 1952, Saudi Arabian Monetary Agency
(SAMA) was established in accordance to the Islamic
laws with the help of USA and various reforms in the
currency system were done enabling only a single
currency to circulate in the country.
The first own banknotes that
Saudi Arabia saw was in the form pilgrim receipts that
were issued in the face value 10 riyals in around
1952. Later on they were also issued in face values 5
and 1 riyals. In 1956-57, the second issue of
banknotes was made in 5 face values that are 100, 50,
10, 5 and 1 riyal to be used as currency notes and
they were put into circulation in 1967. the third and
fourth series of banknotes which were circulated in
1976 and around 1984 respectively are still in use up
to the current date.
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| Factors
affecting the exchange rates between two countries
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The volatility in the foreign exchange rates
depends upon a numerous macro economic factors that
have different degrees of importance to different
economies of the world. Some special and exceptional
factors affecting the rates may also exist in the case
of different countries. Following are shown the common
factors on which the foreign exchange rate depends
- Flow of imports and exports between the
countries
- Flow of capital between the countries
- Relative
inflation rates
- Fluctuation limits on exchange rate
imposed by the governments of the countries
- Merchandise trade balance
- Rate of inflation in the country
- Flow of
funds between the countries for the payment of
stock and bond purchases
- Relative growth
- Short term
and long term interest rate differentials
- Cost of borrowings
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