EDIT: I wrote this post last night 9/19 out of curiousity, turns out today 9/20 the markets got shaken. Will follow with interest. There are mixed reports as of now what is going on with the Saudi Riyal. All I am aware of is this, the USD/SAR just moved today more than it has in years.
The title isn’t the best, though I wanted to represent my feelings on this issue. Saudi Arabia is suffering its fastest pace of inflation in seven year. Much of this, I would presume, is due to the U.S. Dollar. Although the Bank Governor of course denies that the Riyal strength has anything to do with the rising inflation. See, the U.S. Dollar and the Saudi Riyal have a bond that has survived for over 20 years. Since 1986, the Riyal has been fixed at the same value against the U.S.$. Through good and bad, the Riyal sticks to it and maintains that loyalty. But will they now? Could there not be benefit to removing themselves from the bind of the U.S. $ fix?
Kuwait back in May adopted a basket of currencies to “fix” itself against to avoid the risk of incredibly high inflation. Though why fix? Is there that remote chance that a region leader, which Saudi Arabia is, actually let their currency go to the markets will? Jumping ship on the U.S. $ fix may be a good start. Though this trader certainly would welcome new life given to the bound currencies around the globe. Hong Kong Dollar has a range that it trades in; perhaps something like this will be appropriate?
****
I do not know much about economics or about the subject of fixed currencies, nor the economy of Saudi Arabia beyond their oil exports. Perhaps someone who lives in Saudi Arabia, works in Saudi Arabia or understands the dynamics of fixed rates and their place in upcoming history may comment? I opened this thread for those smarter than myself, I am just interested in world currencies. Thanks
The title isn’t the best, though I wanted to represent my feelings on this issue. Saudi Arabia is suffering its fastest pace of inflation in seven year. Much of this, I would presume, is due to the U.S. Dollar. Although the Bank Governor of course denies that the Riyal strength has anything to do with the rising inflation. See, the U.S. Dollar and the Saudi Riyal have a bond that has survived for over 20 years. Since 1986, the Riyal has been fixed at the same value against the U.S.$. Through good and bad, the Riyal sticks to it and maintains that loyalty. But will they now? Could there not be benefit to removing themselves from the bind of the U.S. $ fix?
Kuwait back in May adopted a basket of currencies to “fix” itself against to avoid the risk of incredibly high inflation. Though why fix? Is there that remote chance that a region leader, which Saudi Arabia is, actually let their currency go to the markets will? Jumping ship on the U.S. $ fix may be a good start. Though this trader certainly would welcome new life given to the bound currencies around the globe. Hong Kong Dollar has a range that it trades in; perhaps something like this will be appropriate?
****
I do not know much about economics or about the subject of fixed currencies, nor the economy of Saudi Arabia beyond their oil exports. Perhaps someone who lives in Saudi Arabia, works in Saudi Arabia or understands the dynamics of fixed rates and their place in upcoming history may comment? I opened this thread for those smarter than myself, I am just interested in world currencies. Thanks
The market is my nation. Traders, my family. Hello, brothers and sisters!